The 2011 holiday shopping season won’t be a terrible disappointment to retailers, but judging from current forecasts, the best they can hope for is a modest increase in sales.

A forecast published by ICSC last week predicts that same-store sales during the November/December period will rise 3.5 percent, below the 3.8 percent growth recorded last year. Forecasts from other industry trackers, including Kantar Retail Group and America’s Research Group, say the figure might be even lower—closer to 2.0 percent or 2.5 percent.

Kantar Retail, a Columbus, Ohio-based consulting firm points to low consumer confidence as one reason it expects holiday sales to be more modest in 2011 than they were in 2010.

“The outlook for the 2011 holiday season is not a matter of whether it will be weak, but rather how weak it will be in the wake of declining consumer and business confidence,” wrote Kantar’s Senior Economist Frank Badillo in an Aug. 31 note.

Households “will hold back on spending amid growing uncertainty about the future,” he added.

Over the past two months, U.S. consumers have witnessed wild fluctuations in the stock market, a barely budging unemployment rate and government quibbling about the best way to tackle the slowing economy.

In August, consumer sentiment was near recession levels, according to the Thomson Reuters/University of Michigan Index of Consumer Sentiment. The Index went down to 55.7 during the month, a 19.2 percent decline compared to the same period a year ago. The Current Conditions Index was at 68.7, 12.3 percent below the level recorded in August 2010. The Expectations Index was at 47.4, a 24.6 percent decline from a year ago.

The last time consumer sentiment was that gloomy was during February and March of 2009, according to researchers with Thomson Reuters/University of Michigan, which was arguably one of the worst stretches of the recession.

What to expect

Kantar Retail projects that same-store sales growth for the November/December period will come to approximately 2.5 percent. Kantar tracks about 25 retailers, many of them in the apparel sector. In November 2010, the chains it tracked posted same-store sales growth of 5.6 percent, followed by a 3.2 percent increase in December.

C. Britt Beemer, chairman and CEO of America’s Research Group, a Summerville, S.C.-based consumer behavior research firm, says that, based on the most recent survey he conducted, same-store sales for the upcoming holiday season should be up from 1.0 percent to 2.0 percent. The survey, completed in early September, showed that 17 percent of participating consumers planned to spend more on holiday purchases in 2011 than in 2010, while 27 percent planned to spend less. The rest expected to spend about the same amount of money as they did last year.

So while shopper traffic at the mall might be strong, people will likely curtail their spending, Beemer notes.

“The trouble is, this year you’ve got many more unknowns than you normally do, so the customer is trying to spend less and less on every transaction,” he says. “If you look at last Christmas, when consumers went into stores and used cash, checks or debit cards for payment, they spent about $28 on every purchase. If they used credit cards, they ended up spending $41 to $43.”

This continued focus on value might play to some retailers’ benefit this holiday season at the expense of others, according to Ken Perkins, founder of Retail Metrics Inc., a Swampscott, Mass.-based research firm focusing on the retail industry. Perkins expects that the holiday shopping season this year will look similar to the back-to-school season, with aggregate same-store sales for chain retailers coming in at about 3.0 percent.

Discount stores, dollar stores and off-price retailers, including TJ Maxx and Ross Dress for Less, will likely post solid gains, he says. Luxury stores and high-end department stores like Bloomingdale’s and Nordstrom should also do well.

The retailers that will feel the pinch the most will be mid-tier department stores, including J. C. Penney Co. and Kohl’s.

“It’s very competitive for them,” Perkins notes. “We expect the holiday season to be very promotional, with most of the lower- and middle-tier chains unable to raise prices too dramatically. There is obviously going to be an impact on gross margins.”