Retailers Holiday Hinges on Discounts

Forecasters expect a better holiday season for U.S. retailers, but say the price will be more discounts to get consumers shopping.

The National Retail Federation expects holiday sales to rise 2.3% over last year to $447.1 billion, the biggest increase in three years, in part because of more aggressive pricing strategies. The tone was set by the discount-driven back-to-school shopping season, which wrapped up in September with strong sales of children’s and teen clothing, according to MasterCard Inc.’s SpendingPulse unit that tracks payment by cash, check and credit card.

“We expect a very, very competitive and aggressive Christmas and holiday selling season, price-focused,” Bill Simon, chief executive of Wal-Mart Stores Inc.’s U.S. business, said at a recent conference.

The International Council of Shopping Centers released its forecast Tuesday, predicting an increase in sales during the holiday shopping season of between 3% and 3.5%.

The shift back into discounting mode is an about-face from the previous holiday season and earlier this year, when lean inventories allowed retailers to hold the line on prices. But retailers were forced to roll out promotions to bring customers into their stores when shopping sputtered out in late spring and summer.