• by Sarah Mahoney  @mahoney_sarah, November 21, 2008

You can hardly blame consumers for thinking this may be the best year ever for game retailers. After all, with high-enders like Burberry and Bergdorf Goodman trumpeting drastic price cuts and value-chains like Kohl's advertising 50% off all toys and apparel, it's easy to think that one of these days, someone is going to pay them to walk out of the mall with bags full of cashmere.

But will consumers win this game of cat-and-mouse, forcing fairly desperate retailers to lower prices to insane levels? Or will retailers--who can pretty confidently count plenty of people spending more than they intend to each holiday, no matter what they say their budget is--do better than the apocalyptic headlines suggest?

To find out, we asked Philip Rist, EVP/Strategic Initiatives for BIGresearch, a Worthington, Ohio-based company that does extensive polling for the National Retail Federation.

Q: What kind of gap is likely to emerge between the November surveys, when consumers talk a tough game, and Dec. 21, when suddenly, every parent in America seems to think there just isn't enough under the tree, after all?

A: Let's just say, like the Who, that the kids are alright. In fact, the kids are going to be fine. As long as parents are gainfully employed, they may cut back on adult gifts to their own brothers and sisters. But people don't cut back on their kids.

Q: The extensive price cuts from retailers make it seem like stores are afraid people won't shop at all.

A: Consumers are very smart people. They may not be out there shopping now, but they know there are going to be a lot of deals. They're seeing that it's better to wait a bit. And so stores are trying to reach them earlier, to grab shoppers' money before it's all gone.

Q: So you don't think shoppers are avoiding the malls because they're afraid?

A: No. They're happier since the election, and our data show that. Half of them are happier, since their guy won, and they have more confidence. And everybody is less anxious. And don't forget-- all that campaign advertising, regardless of whether they were McCain ads or Obama ads, focused on the underlying message that the economy is bad. With all that spending, it was at levels comparable to, let's say, Miller beer or Apple computers. Now all that is gone.

Q: But aren't consumers worried about all these dire headlines?

A: Unless you're glued to CNBC all day or focused on the market, they may be a lot more motivated by the decline in gas prices to less than $2 a gallon. I filled up the other day for $1.69! Especially for younger people, those without a 401(k) and who aren't near retirement, that feels more real. Low gas prices will help people more than the bank bailout.

Q: Are they shopping differently?

A: We're still seeing increases in Internet pre-shopping and browsing in the traditional media. People are looking for coupons.

Q: Why?

A: When consumers feel there are so many things in their lives they can't control, they want to control the things they can. It makes them feel better. If they can do a little investigating online before buying a digital camera, there's gratification in that.

Q: So ultimately, what do you expect?

A: The NRF projects a growth of 2.2% in all retail sales in November and December, and that includes restaurants, but not autos or gas. [BIG's] number is 1.9%, and it's a little different--we look at spending from the consumer's point of view, from October, when some start shopping, through January and February, when most gift cards are redeemed. Things are going to be bleak for some retailers, but for those who are offering bargains, consumers will respond.