Murky Forecast for Holiday Shopping

By Kevin Grewal, Editorial Director at www.SmartStops.net

NEW YORK (TheStreet) -- Thanksgiving is right around the corner, and so is Black Friday, which is the official start of the holiday shopping season and traditionally the nation's single busiest shopping day.

Consumer spending has been sluggish during the Great Recession, and it's unclear whether it will pick up enough during the coming holiday season to give the retail sector the boost it needs.

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Most retail industry experts expect lots of people to go shopping on Black Friday, because many retailers are expected to offer exceptional discounts and tailor their offerings to penny-pinching consumers.

For example, Wal-Mart(WMT Quote) is offering consumers a $100 gift card with the purchase of a $199 Nintendo Wii, while Best Buy(BBY Quote)and Office Depot(OD Quote) are advertising netbook computers with the new Windows 7 software, for under $300 and Target(TGT Quote) is expected to offer some home appliances for as little as $3.

Some experts say consumer demand may be surprisingly strong in the next month, because consumers have had more than a year to adjust their spending habits, cope with the weak economy and put a holiday shopping plan together.

Another positive is that retailers have made it easier for consumers to purchase big-ticket items by offering extended layaway plans and earlier sales.

A combination of these factors, has led the International Council of Shopping Centers to forecast a 1%-2% rise in holiday sales.

Those who are looking at the glass as half empty say rising unemployment and an unstable economic outlook will cause consumers to remain cautious and refrain from impulse buying. Additionally, they are suggesting that special sales that retailers had earlier this year may have an adverse affect on Black Friday revenues because some consumers have already made their big purchases for the year. This has led organizations like the National Retail Federation to suggest that revenues for the holiday season are likely to decline.

Investors also need to keep in mind that even if consumers turn out in force and boost retailer revenues, this year's eye-popping discounts may erode margins.