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For instance, some retailers were offering discounts of 40 percent or more on the day after Thanksgiving known as Black Friday. But Jennifer Ambrosh, 40 was unimpressed with the "deals" she saw on that day. "There's a lot of hype, but ... the deals aren't that good," Ambrosh, an accountant, says.
Overall, the retail federation expects spending in November and December to rise 3.9 percent to $602.1 billion. But to get that growth, analysts say retailers will need to discount heavily, which eats away profits.
There are signs that profits for the quarter that includes the holiday season are being hurt by the discounting. Wal-Mart and American Eagle Outfitters are among 47 retailers that have slashed their outlooks for either the quarter or the year.
Overall, retailers' earnings growth is expected to be up 2.1 percent, according to research firm Retail Metrics. That would be the worst performance since profit fell 6.7 percent in the second quarter of 2009 when the country was in a recession.
The recession not only taught Americans to expect bargains. It also showed them that they could make do with less. And in the economic recovery, many have maintained that frugality.
So whereas in a better economy, Americans would make both big and small purchases, in this economy they're being more thoughtful and making choices about what to buy.
Analysts say that hasn't boded well for retailers that sell clothing, shoes and holiday items. That's because Americans are buying more big-ticket items over the holidays.
Government figures show that retail sales were up 0.7 percent in November, the biggest gain in five months. But the increase was led by autos, appliances and electronics.
Auto sales jumped 1.8 percent, furniture purchases rose 1.2 percent and sales at electronics and appliances stores rose 1.1 percent. Meanwhile, sales at department stores and clothing chains were weak.
Americans are leaning toward big purchases for two reasons. They want to take advantage of low interest rates. And since many paid down debt since the recession, they feel more comfortable using credit cards again for such purchases.
But they won't do that and buy smaller items. "This is still a weak, fragile shopper," says Craig Johnson, president of Customer Growth Partners, a retail consultancy.
Retailers including Macy's and Target in recent months have said that shoppers' focus on big-ticket items has put a damper on sales of discretionary items, and the retail federation says it has hurt holiday sales in particular. (continued...)
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