Santa's Bag Will Be Filled With Bargains, Analysts Predict

Santa's Bag Will Be Filled With Bargains
Santa's Bag Will Be Filled With Bargains

If your kid has been hitting you up for a tablet computer, but you haven't wanted to drop a bundle on yet another piece of consumer electronic gear, you're in luck: This holiday season, shoppers should be able to scoop them up at a hefty discount.

Tablets won't be the only deals on retail shelves: Consumers can expect a holiday shopping season heavy on promotional offers as stores offer sweet bargains on all manner of products amid a still-sluggish economy, said John Tomlinson, senior hardlines retail analyst for Investment Technology Group, at a media luncheon titled "Confidence vs. Cynicism: Exploring the Consumer Mindset in Today's Turbulent Times."

Overall holiday retail sales will likely be flat with last year, but some merchants are expected to fare better than others, according to the independent investment brokerage and research firm.

Business at mid-tier players like Kohl's (KSS) and Best Buy (BBY) will trail dollar stores, for one, which have been been luring more consumers hit by tough economic times, and have added more compelling offerings from bigger brands, Tomlinson said.

Retailers are all too aware that consumers, armed with their smart phones, will be price-comparison shopping from their mobile devices more than ever this holiday season. That means stores "are going to be very competitive on price" -- particularly as "Black Friday"-style sales start earlier and earlier in the season, Tomlinson said.

Tablet Wars

In addition to tablet computers, smartphones and video games will be among the big gift items this holiday, said Tomlinson and Matthew Jacob, ITG's senior leisure, lodging and airlines analyst, during the luncheon.

With a host of new tablet computers on the market, including the highly anticipated launch this week of the Kindle Fire for $199 from Amazon, (AMZN) as well as new models from Samsung, HTC and Motorola, expect big holiday price cuts.

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Indeed, the market is over-saturated with tablets, which will also drive down the price, Tomlinson said. Already the HP TouchPad "was on sale for $100."

But one wild card could put a damper on tablet sales this holiday: Apple, the ultimate cool kid and market leader, won't launch the next generation of the iPad until after the holidays. So there's a chance that consumers will delay their tablet purchase until that product hits stores, he said.

Also expect to see big discounts on 3D TVs, a product that fell short of sales expectations, as well as flat-panel TVs.

In the battle for consumer electronics' market share, Best Buy and Radio Shack (RSH) will continue to struggle as consumers increasingly view Amazon as the more appealing shopping venue, lured by its breadth of assortment, low prices and convenience, with perks like Amazon Prime, its free-shipping program.

Video game sales should be a bright spot this holiday, fueled by a raft of high-profile game debuts, such as Call of Duty: Modern Warfare 3 and Battlefield 3, Jacob said.

On the negative side, the Nintendo Wii will see a softening in demand, which is bad for business but good for shoppers, since it will also drive down the price. Nintendo opted to wait until next year to debut its new version of the Wii, Jacob said.

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