Will Early Retail Deals Hurt Christmas Week Sales?

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The media is filled with stories about how retailers will launch discounts early this year. There is no longer any sanctity for Thanksgiving, which used to be the last calm day before stores unleashed their holiday deals the next day. Some stores will open at midnight this year as Thanksgiving turns into Black Friday. Many retail firms will offer special discounts online before their stores open on Friday.

The National Retail Federation expects holiday sales to be up only 2.4% this year to $447.1 billion. That is not much comfort for the industry that suffered through disastrous sales during the holiday shopping seasons of 2008 and 2009. Online sales may be modest comfort. Some experts believe that Internet retail activity may be up 14% or more to over $38 billion. But that is still a small percentage of overall holiday revenue. And, Amazon.com (AMZN) and a few other large "online only" operations will get most of that.

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In all of the frenzy over what will happen the last week of November, there is little said about whether early sales will rob activity from the week before Christmas. Sales activities sometimes works that way. One example is the "cash for clunkers" program, which lifted vehicle sales in the late summer of 2009. There is still debate about whether the program hurt sales later that year and early in 2010. The offers may well have "pulled sales forward," which would means that the federal effort to stimulate the auto industry was no better than a wash.

The economy now is such that there is not likely to be an unexpected surge in holiday sales. Too many people are out of work. Too many others are worried about their jobs. Too many consumers are still leveraged and do not have access to money.

If retail sales are indeed only going to rise 2% to 3% and the weekend of Thanksgiving does drive higher sales than last year because of early discounts, the last week of shopping just before Christmas could be pretty quiet.
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