Holiday sales may fall despite strong weekend

By Jessica Wohl

CHICAGO (Reuters) - Holiday season sales may fall for the first time in decades according to consulting firm Bain & Co., which had expected flat sales this holiday season.

Various groups have issued a wide range of data showing that U.S. shoppers scooped up bargains over the Thanksgiving weekend. The National Retail Federation, a retail industry trade group, said total spending for the four-day Thanksgiving holiday weekend jumped an estimated 18 percent to $41 billion. Meanwhile, ShopperTrak said sales from Friday through Sunday rose just 0.9 percent to $20.1 billion.

"If the favorable Thanksgiving weekend estimates turn out to be true, we've proven that a powerful promotional jolt can get customers' hearts beating again. Now the challenge is to sustain a healthy pulse through the remainder of this painful economic pummeling," said Darrell Rigby, head of the global retail practice at Bain & Co.

Over the past 40 years, there has not been an annual decline in holiday sales and holiday sales have grown an average of 6.6 percent annually during that span, according to Bain. Sales were flat in 1990, it said.

"We're hoping sales will be flat versus 2007. I think it's possible that they could go negative for the first time since we've been able to track holiday sales," he said.

Other industry watchers, such as America's Research Group, have already predicted that sales will fall this holiday season. Bain previously said it expected sales to be flat in the holiday season, which it defines as November and December.

While the Thanksgiving weekend and Black Friday in particular are watched closely by those who track holiday shopping, they do not account for the majority of sales.

"Black Friday is not the biggest shopping day of the holiday season," Rigby said. "It has a catchy name, but the final weekend before Christmas and that entire shopping week before Christmas will be far more important to the total results than Thanksgiving weekend was."

Rigby said that November sales, which most retailers are set to report on Thursday, "are likely to be disappointing."

Still, consumers buying fewer discretionary items and switching to less expensive products have helped retailers such as Wal-Mart Stores Inc (WMT.N), Rigby noted. He said the best results have come in general merchandise categories such as food. Wal-Mart was already the largest seller of food in the United States years before the recession began.

Analysts expect Wal-Mart's total November U.S. sales at stores open at least a year to rise 2.1 percent, according to Thomson Reuters data.

Now, retailers must come up with ways to entice shoppers to return and spend more throughout December.

"It will be an interesting dance between shoppers and retailers during the month of December," Rigby said.

He said shoppers waiting until the last minute may run into problems finding items in the size, color or style that they want, especially as retailers have kept inventories leaner than usual this year.

"I think consumers will be fooling themselves if they think they can wait until the very last minute and still find everything they want at unbelievably low prices. It can't happen," Rigby said.

(Editing by Leslie Gevirtz)