The turkey dinners are being planned, Macy’s is getting ready to deploy a giant Pikachu for its 80th Thanksgiving Day parade, and America’s shoppers are plotting their strategies for the grueling ritual of Black Friday. All the pieces are falling into place for a traditional Thanksgiving weekend. But among the oracles of retail—the analysts and consultants who have their own annual Thanksgiving rite, involving bold predictions of how the crucial holiday season will go—all is not well. This, it turns out, is a tough one to call.

Their predictions are all over the map -- with growth estimates ranging between 2.5 percent and 7.5 percent. And the early portents are confusing. Many mall owners have already announced plans to extend shopping hours beyond the normal holiday times to spur shopping (General Growth will open its 210 shopping centers at 6 a.m. and close at 10 p.m starting the day after Thanksgiving; Simon Property Group, will open the doors to its malls at 5 a.m. Friday, November 24).Wal-Mart and Target are already engaged in a serious price war. On the flip side, some are pointing to gas prices that have fallen off summer highs as a reason for optimism.

The main factors in the wide swing of expectations are the wobbly housing market, rising interest rates on consumer credit and volatility in gas prices. All of these factors have hurt sales in recent months. In October, total chain same-store sales grew 3 percent year over year, according to the International Council of Shopping Centers, below this year's average of 3.9 percent. Projections are also low for November, with ICSC projecting growth of 3 percent.

The National Retail Federation (NRF), an industry trade association, posted one of the lowest estimates for 2006, with 5 percent growth, or $457.4 billion in sales. The federation’s chief economist Rosalind Wells says consumers have faced too many economic challenges this year to match last year’s growth, when holiday spending rose 6.1 percent to $435.6 billion.

Some estimates go even lower. C. Britt Beemer, founder of the America’s Research Group, a Charleston, S.C.-based consumer behavior research company, thinks growth will be in the 2.5 percent to 3 percent range.

While many analysts say it will be another big year for electronics—iPods and flat-screen TVs, Beemer says consumers tell his researchers that there’s nothing new to buy. “I think that luxury will be the only category to do well and many people are going to be giving service gifts, like spa gift certificates, and that means that those dollars won’t be going to retailers,” he says.

While the price of gasoline has retreated from the $3 per gallon that kept shoppers close to home last summer, Steven Keith Platt, director of the Platt Retail Institute, a Hinsdale, Ill.-based economic consulting firm, figures that’s not enough to re-open pocket books. “Most retailers are banking on a reduction in gas prices, but we don’t see that as having a big impact,” he says. “We are still looking at a very indebted consumer.” Platt forecasts growth of 4.5 percent in retail sales this holiday season.

The most optimistic forecast comes from Visa USA, which expects sales to grow by 7.5 percent in 2006. A large chunk of the growth will be at restaurants and entertainment venues, however, the card-issuer says.

Bernard Sands LLC, a South Plainfield, N.J.-based retail rating and credit services firm is in the middle, predicting growth of 5.5 percent to 6 percent this year, depending on the weather on the critical shopping days of Black Friday and the two days before Christmas. The firm estimates that the 20 percent decline in energy prices in the second quarter of 2006 will contribute $25 billion to U.S. consumers’ discretionary funds. In the second quarter, Americans spent approximately $359 billion on energy, according to the Bureau of Economic Analysis.

For the upcoming holiday season, accounting firm Ernst & Young LLP expects a sales increase of 6.5 percent, or $520 billion. Pricing will have the biggest impact on top line growth, according to Jay McIntosh, director of consumer products with Ernst & Young. In other words, as in years past, retailers may talk big before Thanksgiving about not discounting until after Christmas, but you can expect to see lots of special promotions and price cuts by next weekend.

“The one question mark that we have right now is how aggressive retailers are going to be on pricing,” he says.

In the discount merchandiser category, the answer is very aggressive. On Tuesday, discount giant Wal-Mart announced that it will pursue its “most aggressive pricing strategy ever,” this season. Wal-Mart started slashing prices back in October, on toys, electronics and small appliances, the categories that tend to be the most popular for gift giving.

In response, Target president Gregg Steinhafel told investors that it plans to compete with long-running discount programs on apparel, a category where Wal-Mart has been struggling to compete.

“Consumer electronics will be the strongest sector overall by a substantial margin,” says Craig Johnson, president of Customer Growth Partners, a New Canaan, Conn.-based market research firm. “Best Buy, which has always been strong during the holiday season, should see a lot of growth.”

Last December, Best Buy reported revenue growth of 12 percent to $5.7 billion for the month.
Johnson expects overall holiday sales growth for the retail sector to be in the 5.4 percent to 6.5 percent range in 2006.

If the season comes in at the low end of expectations, next year could bring additional restructuring. Investors say that private-equity funds have been circling Dillard’s Department Stores and Gap Inc., both of which could be take-out bait if they don’t deliver in December.

-- Elaine Misonzhnik