Households to Increase Holiday Spending for 2011

NEW YORK (AP) - Retailers just got an early Christmas gift: Americans are expected to spend more than they did last year during the holidays.

Retail sales in November and December are expected to be up 3 percent during what is traditionally the biggest shopping period of the year, according to research firm ShopperTrak said Tuesday.

The sales predication, which matches the outlook from the International Council of Shopping Centers on Friday, would be below last year's 4.1 percent spike - and the 5-plus percent gains during boom economic times. But it's still above the 2.6 percent average gain over the last 10 years and is considered respectable growth given the down economy.

"Clearly, consumers will remain surgical in their spending," said Bill Martin, ShopperTrak, co-founder. "But the Christmas season should still be quite satisfactory."

The industry is still waiting for a widely-watched forecast on Oct. 6 from the National Retail Federation, the nation's largest retail trade group. But the ShopperTrak and ICSC predictions are the first look at how retailers might fare during the shopping period that can account for up to 40 percent of merchants' annual revenue. Retailers are worried that many Americans are saddled by concerns about their jobs, the stock market and the overall U.S. economy, which could lead to them cutting back on holiday shopping.

So far, consumers still are spending on necessities, as shown during the critical back-to-school spending, the second-biggest shopping period of the year. However, they're expected to continue to shop for bargains, a buying habit many picked up during the recession.

Customers also are expected to do more research online before they head to stores - and browse less when they are in stores. As a result, customer traffic in the store is expected to be down 2.2 percent, according to ShopperTrak, which measures foot traffic in 25,000 stores in the U.S. and blends those figures with economic data.

"Every shopper in a store will be more valuable than last year, and retail stores should be ready to convert their holiday shoppers into sales," said Martin.

When consumers do head out to the stores for the holidays, the divide that's been seen this year between luxury purchases and bargain shopping is expected to continue.

ShopperTrak says specialty shops that sell low-end clothing and accessories may feel the need to cut prices to compete with discount chains, but that upscale stores will likely be able to cash in on consumers looking for goods they feel will hold up over long-term use.

The retail analyst expects clothing and accessories sales to rise 2.7 percent over the holidays, but for its traffic to dip 1.1 percent compared with a year ago.

Electronics and appliance sales are expected to rise 1.2 percent from the previous year, but traffic is predicted to fall 4.9 percent. ShopperTrak says the category will likely be hurt as consumers do comparison shopping and then buy online as well as the lack of any "hot" holiday product that will draw in more shoppers. The demise of many of the nation's consumer electronics chains, such as Circuit City, has also left consumers with fewer places to shop.