Retail chains and retail real estate owners have engaged the spin room in hopes of convincing consumers to holiday-shop the economy to health. But the facts and the spin are not matching up these days.

At the very time retailers are launching promotional programs and touting shopper turnout, consumer confidence is plunging. And retail real estate owners privately fear that a failed Christmas shopping season could lead to sudden vacancies at malls across both urban and suburban markets.

The Conference Board's index of consumer sentiment fell to 82.2 in November, its lowest level in more than seven years. The numbers may push down even further now that the U.S. government has made official pronouncements placing the beginning of the current recession in March.

The Conference Board also has projected a decrease in Christmas spending this year. According to the organization's Consumer Research Center, U.S. households will spend an average of $462 on gifts this Christmas, down from last year's projected average expenditure of $490. Retail sales are expected to be approximately $50 billion -- about 4 percent below last year's projection.

"The sluggish economy, declining consumer confidence, widespread layoffs and the tragic events of September 11 appear likely to hold down holiday spending as we head into the final five weeks of the year," said Lynn Franco, director of the Consumer Research Center. "But retail outlets offering the price-conscious consumer a good buy may fare better than projected."

The Thanksgiving weekend created mixed results for retailers. Large chain stores saw sales increase 2.2 increase for the week, which is considered the kick-off for the holiday shopping season. But even though this was a gain, it was the smallest such increase in five years.

The most secure stores seem to be the discounters, like Wal-Mart, which are luring price-conscious consumers with big sales and holiday bargains.

On the flip side, mall specialty stores saw sales drop 1.5 percent during the Thanksgiving weekend compared with last year, according to the International Council of Shopping Centers (ICSC). For Nov. 23 through Nov. 25, stores that sell home-oriented "nesting" products fared well, while all other categories were hit hard. Sales of home furnishings and furniture rose 5 percent over the same three days last year, while sales of music, video and home entertainment rose nearly 10 percent.

Yet other categories were hard hit: apparel was down 6.1 percent, food service down 4.7 percent, jewelry down 2.3 percent; stationery, cards and books down 6.7 percent; and toys and sporting goods down nearly 2 percent.

"There are no surprises here. As expected, consumers continue to be cautious in their spending habits," said Michael Baker, director of research for ICSC. "They are making purchases that contribute to a strong sense of home and family, exemplified by the strong sales increases in the home furnishings and home entertainment categories.

Baker still has high hopes for the rest of the season, though.

"Thanksgiving weekend accounts for only about 10 percent of total holiday sales, so there is a long way to go," he said. "With four complete weeks of shopping left, the season will most likely follow normal sales patterns, with the majority of holiday spending coming at the end of the season."

Some shopping center chains, like The Mills Corporation (NYSE: MLS), are commissioning surveys to see if consumers will spend their bucks this Christmas, in spite of recession. A survey conducted by ACRA for The Mills found that nearly 70 percent of shoppers plan to spend the same amount or more this holiday season as they did last year.

"This annual survey is invaluable to us, because it gives us a clear picture of consumer sentiment," said Kent Digby, executive vice president for The Mills Corporation. "This year's results suggest that the Mills mix of value-oriented retail and family entertainment will give shoppers what they're looking for this holiday season."

Ahoppers may turn out in droves to look, but will they buy? Sales and promotions clearly have pulling power. A study by Accenture revealed that 45 percent of survey respondents said that sale items would be "very influential" in their purchasing decisions.

As a result, retailers are slashing their margins and launching promotional programs to attract shoppers. While several chains have all but given up on their e-business strategies, others are using web sites to drive people into their stores.

And yet anther survey, this one a web-based study by Taubman Centers, Inc. (NYSE: TCO), says about one-quarter of respondents said they would be halfway through with their gift list by Turkey Day.

For more articles by Lesley Hensell, please press here.

Published: December 5, 2001

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