Optimistic holiday shoppers have retailers smiling

In this Dec. 18, 2010 photo, shoppers are photographed on 34th Street, in New York. Call it Black Friday, Part II. Stores are rolling out the deals and expect to be swimming in shoppers on Christmas Eve as shopping stragglers take advantage of a day off work. For retailers, the last-minute rush caps a "back-to-normal" holiday season. (AP Photo/Mary Altaffer)

December 19, 2011 7:01:28 PM PST
Six more shopping days until Christmas, and retailers are smiling. In fact, the National Retail Federation is raising its holiday sales projection from 2.8 percent to 3.8 percent over last year. Retailers say sales are up for one simple reason -- optimistic shoppers. They are seeing confidence about spending money they haven't seen in two years.

They're calling it the miracle on Lincoln Avenue. Foot traffic into stores has been heavy since Thanksgiving, and sales are up because shoppers aren't as tight-fisted as last year.

"There's definitely a better sense of optimism. People are just happier," said Kathy Haren, proprietor of Domus, which specializes in kitchen and home goods. "They are wanting to give, they are happy to give, and they're happy that they're in an ability to give again."

Shoppers say it's easy to spot the change in attitude.

"The lines in most of the stores have been pretty long, and I think I started two weeks ago, and even then, there were people waiting in line," said Campbell resident Melissa Goldstein.

On the whole, retailers aren't discounting as deeply as last year to get consumers to spend. The research firm ShopperTrak says 30 to 40 percent discounts are typical this year, compared to 50 to 60 percent last December.

Retailers say they've hit that magic formula of bargain pricing and making a profit.

"Transactions are up as well... as the amount per transaction is up as well," Haren said.

Shop owners, such as Robin Levine, wish they could re-order more merchandise to keep up with demand. However, manufacturers have kept inventory limited.

"I was begging a couple of weeks ago, instead of more recently, for more supplies," Levine said. She says if she could get more merchandise, she could probably sell it.

While there's an upbeat mood among shoppers now, the real test will come after the new year. Consumer spending could slow significantly with unemployment still a drag on the economy.

Shopper Karynn Zmijewski is spending now, but says she'll apply the brakes after the holidays.

"Maybe take it easy for a little while," she said. But asked if there's still a sense that she'll have to watch the spending, she replied, "Oh yes, absolutely."

Consumer optimism has also spilled over into online shopping. Internet retailers are expected to see their sales increase by as much as 10 percent over last year.