Image: Shoppers
Susan Walsh  /  AP
Store inventories are not as depleted as last year, when merchants scared about having too many leftovers began the season with skimpy offerings.
updated 12/15/2010 5:51:55 PM ET 2010-12-15T22:51:55

You won't find uncommonly deep discounts, but you won't have to worry about finding something to buy, either. For the first time in three years, the Christmas season is looking brighter for stores and shoppers alike.

With plenty of dollars remaining to be spent, stores are trying to attract late shoppers with measured discounts and other gimmicks, including pulling all-nighters and pushing more last-minute gifts.

Consumers are more primed to spend than they have been in several years. Projections for holiday spending are starting to approach pre-recession levels. The National Retail Federation and research firm ShopperTrak both raised their holiday forecasts this week.

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Shoppers spent more than expected in November, helped by early discounts. And even though they've backed off more in early December than stores had hoped, analysts and retailers aren't worried.

That's because a burst of spending happens in the 10 days before Christmas, a period that accounted for 34 percent of holiday sales last year, up from 31 percent in 2006, according to ShopperTrak.

Store inventories are not as depleted as last year, when merchants scared about having too many leftovers began the season with skimpy offerings. That made it hard for shoppers to buy even a strand of lights in early December.

A few hot sellers are hard to find, according to Karen MacDonald, a spokeswoman at Taubman Centers. And those seeking some of the hot toys like Mattel Inc.'s Monster High dolls will have a hard time, though Toys R Us says it will keep getting daily shipments of the season's hot toys.

"We are in very good stock position," said Kathleen Waugh, a Toys R Us spokeswoman. "We picked the right toys. We'll be ready around the clock."

The National Retail Federation, the nation's largest retail trade group, raised its holiday forecast to 3.3 percent from its original projection that sales would climb 2.3 percent. That would put holiday sales at $451.5 billion, close to the holiday 2007 levels of $452.8 billion and well above 2006's $444.7 billion. The figure excludes auto, restaurant and gasoline sales.

The increasing optimism comes as government figures released Tuesday showed that retail sales for November jumped 0.8 percent over October.

A lot depends on this weekend, the last before Christmas. If stores don't make their sales goals, shoppers may see steeper discounts in the final days. Stores are betting that won't happen.

"You're definitely not going to see the fire sales. The discounts will be measured," said Sherif Mityas, partner in the retail practice at A.T. Kearney. He said that clothing discounts in general won't be much more than 40 percent this weekend. "Retailers have learned a lot during the recession."

Among those lessons: Shoppers often need a discount or a gimmick to buy.

Toys R Us plans to keep its stores open for 88 straight hours, from 6 a.m. Tuesday until 10 p.m. Christmas Eve. This is the first time the entire chain will be open in the final countdown to the holiday.

Macy's Inc. has increased the number of stores pulling all-nighters starting next Tuesday to 14 from last year's 12; a few others will stay open until 2 a.m. next week.

So far, analysts say, Target's 5 percent discount for paying with the discounter's branded debit and credit card is stealing sales away from other rivals. Chandra Blatt, 38, of Hillsdale, N.J., who was at the Target store in Paramus, N.J., on Friday, said she'll do about half of her Christmas shopping this year because of the incentive.

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"Every little bit helps," said Blatt, who was picking up toys, a bathrobe and other gifts. She said she saved $24.01 because of the discount. But she won't be spending more overall. She and her husband both got jobs earlier this year, after being unemployed for a year, so they are "still playing catch up," she said.

Department stores such as Macy's appear to be attracting holiday shoppers with a focus on exclusives and affordable items. Macy's spokesman Jim Sluzewski said the chain is sticking to planned promotions.

There are some laggards as well.

Best Buy Co., the nation's largest electronics chain, has lost sales of lower-priced TVs and laptops to competitors Wal-Mart and Amazon.com. Best Buy said that it has stepped up discounts for 32-inch TVs in December and increased its offerings of laptops under $400.

Story: Frugal parents skip stores for online toy swaps

Consumers are not entirely back. They are still "seeking value" but it's not all about price, Morris said.

"We're trying to buy things that are more meaningful instead of a bunch of little things," said Sarah Porter, 25, who was at Pioneer Place Mall in Portland, Ore., on Friday.

ShopperTrak, which tracks total retail sales at more than 70,000 outlets, now expects holiday sales to rise 4 percent over last year, up from a previous projection of 3.2 percent made in mid-November. The original estimate was for a 2.9 percent increase. A 4 percent increase is considered quite healthy.

Shoppers, however, have had a bit of a hangover so far in December. Sales for the week ending Saturday fell 0.4 percent compared with last year, according to ShopperTrak. Another culprit was a winter storm that dumped mounds of snow across the upper Midwest on Sunday.

Jack Kleinhenz, chief economist at the NRF, said that while early promotions in November and bad weather last weekend may have taken a bite out of December, he feels encouraged by a "positive cluster of economic data." He pointed to an improving stock market, income growth and the extension of government unemployment benefits.

"People do have the capacity to spend," he said. "The way I am looking at it, it's going to be a good season."

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Retail Rebound?

Explainer: 12 hit toys of Christmases past

  • Hers & Mine Antiques Mall

    The new video game systems Microsoft Kinect and PlayStation Move will almost certainly be huge sellers — the toys most likely to cause a panic among eager shoppers over the next month.

    (Mnsbc.com is a joint venture of Microsoft and NBC Universal.)

    Then again, the media darling this Christmas could just as easily be a bizarre-looking ball of fur that spouts insults in a made-up language. That’s the fun of hot holiday toys. No one knows that a Furby doll or a Tickle Me Elmo will cause otherwise rational shoppers to trample their fellow man until the free market decides for itself.

    Here are a dozen of the most popular, groundbreaking and notorious holiday toys from the past 80 years. We looked beyond the most famous toys of all time, choosing items that peaked in popularity just before the holiday season, experienced shortages around Christmas and in many cases quickly fell out of favor after the hype was over. (Which explains why Teddy Ruxpin made this list, while Barbie dolls and hula hoops didn’t.)

    Also included is the original retail price was included for each toy, and what collectors are asking for the toy on eBay. (A median price was chosen in most cases.) As you’ll see, it’s much better to have a “Star Wars” action figure in its original packaging than a Zhu Zhu Pet …

  • Shirley Temple doll (1934)

    Hers & Mine Antiques Mall

    The hype: Who can we blame for the holiday toy madness that makes children and parents insane around the holidays? Shirley Temple. The first celebrity-driven doll was manufactured by The Ideal Toy and Novelty Company when Temple was 6 years old, in the third year of her movie career. The demand became huge after the child actor’s breakout film, “Bright Eyes,” was released three days before Christmas. Ideal sold a reported $45 million worth of Shirley Temple dolls in seven years.

    Price in 1934: $2.89 to $5.79

    eBay price in 2010: $1,545.50

    Bet you didn’t know … While the actress was the model for the doll, Ideal didn’t think to put Temple’s name on the package until after the first generation.

    Where are they now? Sales continued until 1941, with several re-releases during the past 70 years.

  • Chatty Cathy (1960)

    Courtesy of Hankiesandmore.com

    The hype: In a move that charmed a generation of young girls — and a few future horror film directors — the Mattel Corporation put a phonograph in an otherwise unremarkable doll, allowing her to say 11 different lines when a ring was pulled. The two neediest lines: “Do you love me?” and “Please brush my hair!” Cathy was the inspiration for the Talking Tina doll (“I’m Talking Tina and I’m going to kill you”) in a memorable 1963 episode of “The Twilight Zone.”

    Price in 1960: $19.90

    eBay price in 2010: $195.00

    Bet you didn’t know … A 1969 reissue used the voice of Maureen McCormick from “The Brady Bunch.” Voice actress June Foray provided the voices of both Chatty Cathy and Talking Tina.

    Where are they now? Sales continued until 1965, with updates in the 1970s and 1980s. Most surviving Chatty Cathys are mute; several of the vital mechanisms weren’t built to last.

  • G.I. Joe (1964)

    Anonymous  /  ASSOCIATED PRESS

    The hype: After watching the Barbie line of toys become a market force, Hasbro came up with G.I. Joe, a foot-tall military action figure (don’t call it a doll!) with a name inspired by the 1945 movie “The Story of G.I. Joe.” The figures came with names like “Ace” and “Rocky,” and didn’t have much variety — developing scuba diving, astronaut and other themes in subsequent years. The figures were in huge demand out of the gate, making a then-impressive $16.9 million in sales in 1964.

    Price in 1964: $4

    eBay price in 2010: $210

    Bet you didn’t know … The makers of G.I. Joe owe a lot to “Star Wars” for their longevity. The much derided 3 3/4-inch G.I. Joe figures released in 1982 were a huge hit, no doubt from kids used to collecting similarly sized “Star Wars” figures.

    Where are they now? The G.I. Joe franchise does well in times of peace and poorly in times of war. Sales suffered during the Vietnam War, but the doll made a comeback in the 1980s — and again after the release of last year’s live action “G.I. Joe” movie.

  • “Star Wars” action figures (1977)

    Darth Vader
    Juan Garcia  /  KRT/Newscom

    The hype: Whatever you think about his movies, George Lucas was a marketing genius. Since toymaker Kenner didn’t have time to manufacture more than a few coloring books and board games after the surprise success of “Star Wars,” Lucas still made millions selling vouchers for 3 3/4-inch tall action figures. Bright-eyed children on Christmas morning unwrapped something called an “Early Bird Certificate Package,” with information about the figures they would receive in a few months, but no actual toy. Original figures ranged from the obvious (Darth Vader) to the obscure (Death Star Commander).

    Price in 1977: $2.79

    eBay price in 2010: $3.99 to $1,200

    Bet you didn’t know … More than three decades later, two of the most valuable action figures are manufacturing screw-ups: a Luke Skywalker with brown hair and a Han Solo whose head is too small.

    Where are they now? “Star Wars” is arguably bigger than ever, with help from “The Clone Wars” cartoon series. Most of the 12 original figures have been re-released in a “Star Wars” classics line.

  • Cabbage Patch Kids (1983)

    Cabbage Patch Kid
    Jacques Chenet  /  Getty

    The hype: Up until this point, there had been fad toys, but people had mostly acted like members of a civilized society in their quest for them. That all ended in 1983, when Coleco’s Cabbage Patch Kids became a huge media-fueled hit, causing a mad scramble for the few million of pudgy-cheeked dolls that were produced before Christmas. Demand from children who wanted to “adopt” a doll led to adult fistfights and price gouging, with some Cabbage Patch Kids selling on the black market for 10 times their retail price. The fad got even bigger the next year; 18 million Cabbage Patch Kids were sold in 1984.

    Price in 1982: $25

    eBay price in 2010: $7.99 to $499

    Bet you didn’t know … One subsequent high-profile failure for the franchise was the Talking Cabbage Patch Kids, which used new technology that allowed more than one doll to converse with one another.

    Where are they now? Coleco went bankrupt in 1988, mostly because of failed video game and computer ventures. Cabbage Patch Kids are still sold by Play Around.

  • Transformers (1984)

    Hasbro Inc. via AP

    The hype: This cartoon about warring factions of anthropomorphic robots from outer space was hugely popular, aided by a barrage of commercials containing one of the most insidious earworms in history (“Transformers! More than meets the eeeeeeye …”). Hasbro created a full line of toys, but demand quickly exceeded supply during the holiday season. After honing their retail-fu skills during the Cabbage Patch Kid craze, parents fought like Autobots and Decepticons for the remaining toys. Hasbro watched its shares rise from $23 to $60 in 1984. Hasbro shipped an estimated $80 million worth of Transformers for the year.

    Price in 1984: $2.99 to $27.99

    eBay price in 2010: $1.99 to $1,495

    Bet you didn’t know … Among the voice-over artists in the early cartoons and movies: Scatman Crothers and Marlon Brando.

    Where are they now? The toys never went away, but didn’t reach the A-list again until Michael Bay’s 2007 live action “Transformers” movie scored big.

  • Teddy Ruxpin (1985)

    Teddy Ruxpin bear, w. built-in microchip
    James Keyser  /  Getty

    The hype: If you couldn’t make a single friend in elementary school, your parents could buy you a Teddy Ruxpin. The brainchild on a Disney Imagineer named Ken Forsse, the talking bear and his friends were home versions of the animatronic puppets kids saw at theme parks and pizza parlors. Worlds of Wonder sold 800,000 Teddy Ruxpin dolls in 1985 — which were fetching double or triple their already steep price because of shortages around the holidays.

    Price in 1985: $68

    eBay price in 2010: 99 cents to $71

    Bet you didn’t know … Many of the first generation Teddy Ruxpins arrived with a glitch, speaking in a disturbing gibberish. Teddy Ruxpin was recalled the following year, with more than 12,000 returned as defective.

    Where are they now? Worlds of Wonder went bankrupt in 1988. Hong Kong-based Backpack Toys manufactures a relatively small number of Teddy Ruxpin accessories through 2010.

  • Tickle Me Elmo (1996)

    Tyco's Tickle Me Elmo doll, popular toy
    James Keyser  /  Getty

    The hype: Elmo had long since ousted Grover as the Alpha Male of “Sesame Street,” and was a steady merchandise boon for Tyco Toys and Children’s Television Workshop. But no one predicted the runaway success of Tickle Me Elmo, which is a close second to the Cabbage Patch Kids in the history of holiday hype. The injuries were plentiful (one store worker broke a rib during a stampede) and reports of 600 percent markups or more weren’t unusual. Faith in humanity was occasionally restored, too, with many reports of Tickle Me Elmos getting auctioned off for good causes.

    Price in 1996: $27.99

    eBay price in 2010: $9.60

    Bet you didn’t know … One later generation Tickle Me Elmo doll worked like a Willy Wonka golden ticket, programmed to tell the owner that they won a $200,000 prize.

    Where are they now? Mattel bought out Tyco and has kept the brand alive, most notably with the 2006 release Tickle Me Elmo Extreme, which moves so convincingly that it appeared to be possessed.

  • Beanie Babies (1996)

    Little Five Year Old Adam Kalina
    Bill Greenblatt  /  Getty Images

    The hype: If you were the parent of a small child in 1996, and had a hard time saying no to your kid, chances are good you spent hours going from store to store looking for Bongo the Monkey or Tusk the Walrus. Developed earlier in the 1990s, Beanie Babies were doing fine as a business — but became a huge phenomenon after salesman H. Ty Warner got the brilliant idea to “retire” some of his already successful babies, making them valuable on the collectible market. With consumers combing stores looking for the rare ones (and often settling for more common new Beanie Babies) during the holidays, the company ended 1996 with $250 million in sales.

    Price in 1964: $4.95

    eBay price in 2010: $4.99 (the rarest Beanie Babies go for as high as $5,000)

    Bet you didn’t know … Among the Beanie Baby tribute dolls were a Jerry Garcia tie-dyed bear, and a Diana tribute bear that was released after the Princess of Wales’ 1997 death.

    Where are they now? Beanie Babies have come and gone over the years, occasionally showing up in fast food kid meals or to promote a brand such as SpongeBob Squarepants.

  • Furby (1998)

    Furby
    Getty Images  /  Getty Images

    The hype: The Furby was like having a cross between a Teddy Ruxpin and a foreign exchange student in your home. The owl/hamster hybrid, which came in different shapes and colors, came out of the box speaking an unidentifiable language (“wee tee kah wah tee” = “sing me a song”) and slowly learned English. They were an early holiday phenomenon, hyped constantly on television newscasts. Tiger Electronics could only produce about 2 million — far fewer Furbys than children wanted — but came back to sell 14 million in 1999.

    Price in 1998: $35

    eBay price in 2010: $11.51

    Bet you didn’t know … The second-most searched Furby site on Google is www.phobe.com/furby, which shows the result of a customer’s autopsy he conducted on his “dead” toy.

    Where are they now? The original Furby was discontinued in 2000. An upgraded Furby that could carry on a conversation was produced from 2005-2007.

  • Nintendo Wii (2006)

    Wii
    Scott Barbour  /  Getty Images

    The hype: The Nintendo Wii had a cool new motion-sensing wand, but its graphics and family-friendly games looked quaint compared to the high-powered Xbox 360 (already one year old) and PlayStation 3. The U.S. media initially hyped the PS3, but by Christmas the Wii was a much harder system to find. Wii-hungry gamers waited in long lines at retail stores that were receiving only a few units each, and shortages continued throughout the following year. Nintendo sold about 3 million units worldwide by Christmas 2006, and another 17 million in 2007.

    Price in 2006: $249

    eBay price in 2010: $120

    Bet you didn’t know … Shortly after the console was released, Wii players started complaining about a variation of tennis elbow. Wii-itis has been written about both in the New England Journal of Medicine and WebMD.

    Where are they now? The Wii claims to hold a worldwide lead in sales over the Xbox 360 and PlayStation 3, but will face a new challenge this year as both systems release their own motion-sensing game controller updates.

  • Zhu Zhu Pets (2009)

    Zhu Zhu Pet toy
    Mark Lennihan  /  AP

    The hype: The Zhu Zhu pets didn’t reach Cabbage Patch Kid or Tickle Me Elmo levels of consumer mayhem. Unlike many holiday toy makers of the past, Cepia LLC of China was able to ship millions of Zhu Zhu pets a few days before Christmas, no doubt averting several riots at Wal-Marts  throughout the country. Cepia estimated $70 million in sales in 2009, according to the St. Louis Post-Dispatch. Hopefully toy makers are starting to see a pattern here: while it’s impossible to predict the most-hyped toy of the season, it’s always good to invent something that will look cute when consumer reporters and anchors play with it on the morning TV news.

    Price in 2009: $10

    eBay price in 2010: $12

    Bet you didn’t know … A consumer group suggested that one of the pets, Mr. Squiggles, had a dangerously high level of the metal antimony. Cepia rejected the claim and sales of the Zhu Zhu Pets did not flag.

    Where are they now? Probably stuck under your couch. (Zhu Zhu pets and related accessories are still being manufactured.)

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