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Capital Ladder Advisory Group is entering this shortened holiday shopping season with a cautious outlook as consumer sentiment continues to reflect the abnormal monetary policy and fickle Washington rhetoric surrounding "Obamacare" and its underwhelming rollout to the public. The consumer confidence index fell in November to 70.4 from 71.2 from in October, as Americans grew somewhat more worried about future employment and income prospects, the Conference Board said Tuesday. Economists polled by Reuters had expected the index to rise to 71.2. The future expectations index slipped to 69.3 from 72.2, while the present situation index dipped to 72.0 from 72.6. "When looking ahead six months, consumers expressed greater concern about future job and earning prospects, but remain neutral about economic conditions," said Lynn Franco, director of economic indicators at the Conference Board. "All in all, with such uncertainty prevailing, this could be a challenging holiday season for retailers."

It doesn't look very promising for the retailers as they are not just up against a weakened consumer sentiment outlook, but they are also battling against a shortened holiday shopping calendar. This year's holiday shopping season has 6 fewer days in the cycle which is forcing retailers to adjust their holiday sales offerings. Target Corp. (NYSE:TGT) and Wal-Mart (NYSE:WMT) are playing an interesting game of cat and mouse as one tries to outdo the other in a fight for every consumer dollar. Wal-Mart will open its Thanksgiving holiday sales event at 6:00 pm with Target forced to follow at 8:00 pm. With Wal-Mart moving its Thanksgiving sales event up 3 hours vs. the year ago period, Target has moved up its Thanksgiving sales event by 1 hour. Wal-Mart didn't stop with opening its holiday sales event earlier than a year ago.

Wal-Mart began holding online sales events on November 1 which began by featuring items from JVC 42-inch LED televisions for $299 to Xelio 10.1-inch tablets for $49. Those are Walmart.com's lowest prices in those categories. The world's largest retailer is also offering free shipping on about 99 percent of its online items this year for orders over $50. Last year, only 15 percent of its assortment qualified for free shipping.

The earlier deals and bigger incentives come after data firm ShopperTrak forecast the slowest holiday sales growth since 2009, and other data showed consumer confidence tumbled in October as a partial government shutdown rattled households. "We have had the debt-ceiling crisis and payroll tax increases. There has just been a lot of pressure on the customer all year along," Joel Anderson, president and chief executive of walmart.com U.S. told Reuters last month after the retailer reported unsatisfactory results during the most recent ended quarter.

Target Corp. says it is spending more on holiday advertising, extending its price-match policy and expanding its "buy online, pick up in store" service to all U.S. stores which launched November 1st. "It has been a difficult, choppy year from an economic standpoint," said Kathryn Tesija, Target's executive vice president of merchandising and supply chain. She expects holiday shoppers to be very budget-conscious.

During the month of November, Wal-Mart took holiday promotional events and marketing a step further with its enhanced price match policy for the holiday shopping season. At 8 a.m. on Friday, Nov. 22, Wal-Mart will kick off a pre-Black Friday savings event in stores and online, lowering the prices on popular toys and electronics, to match select Black Friday offers from Target, Toys R' Us and Best Buy (NYSE:BBY) one week early.

On November 19th, the retailer also extended its Christmas Ad Match* to Walmart.com customers. Customers who purchase an item on Walmart.com, and find a lower price in a local brick and mortar competitor, can email christmasadmatch@walmart.com and receive the difference on a gift card. The same policy is in place for customers at Wal-Mart stores for items purchased Nov. 1 through Dec. 24, excluding Thanksgiving Day and Black Friday. "Black Friday is our Super Bowl and we plan to win," said Duncan Mac Naughton, chief merchandising and marketing officer, Wal-Mart U.S. "With six fewer days from Thanksgiving to Christmas, the retail environment is more competitive than ever. Every opportunity to get a great deal - whether this weekend, on Thanksgiving Day or Black Friday weekend - matters for our customers. When it comes to price, we're going to deliver for them."

Wal-Mart's official Black Friday events will take place at 6 p.m. and 8 p.m. on Thanksgiving Day and 8 a.m. on Friday, Nov. 29. The retailer will offer 21 one-hour guarantee items, "Manager Specials" and more hot deals than ever. Starting early on Thanksgiving morning, customers can shop on Walmart.com for some of the Black Friday deals that will also be available in stores.

In an attempt to keep up with Wal-Mart's onslaught of promotional and discount oriented Thanksgiving and Black Friday sales, Target has launched its Cyber Monday campaign. Target today announced new ways for guests to save even more this holiday season, with special offers starting before Thanksgiving and running through Cyber Week. The offers include Target's biggest-ever Cyber Week event on Target.com, an online Black Friday preview sale exclusively for REDcard holders and an early chance at Black Friday-like deals using Cartwheel, Target's new savings app.

The new offers start today, when REDcard holders can shop 25 Black Friday doorbusters in an exclusive two-day offer on Target.com. On Wednesday, Target will offer special Black Friday-like deals on some of the season's hottest toys and electronics in stores nationwide through Cartwheel, Targets new digital savings program which allows guests to choose in-store offers and claim savings straight from their smartphones. Then, beginning in the early hours of Thursday, Target.com will make virtually all of Target's Black Friday door busters available online. On Friday, Nov. 29 (12:01 a.m. local time to store close), guests who spend $75 or more in Target stores or on Target.com beginning 2 a.m. Central time Friday will receive a coupon valid for 20 percent off nearly all items of a single, store-wide purchase in the first week of December.

Target's Cyber Week event will kick off on Sunday, Dec. 1 and will be promoted using broadcast television spots for the first time. Throughout the week, more than 100,000 items will be on sale including category-wide deals on toys, women's and men's apparel. Target is also extending free shipping on more than 300 of the hottest toys through the entire holiday season.

Now if you live in Northern California, boy does Target have a deal in store for you. On its 3rd quarter conference call with investors and analysts alike, Target announced it is going to test a new holiday pricing promotion in Northern California during the 4th quarter. This week, Target will be testing a special offer in Northern California stores where all apparel and accessory items will be 40% off from the timely open on Thanksgiving through close of business on Saturday. This offer will be available in 89 stores and will include women's, men's, kids, baby, apparel, along with jewelry, accessories, and shoes; the only exclusion is clearance items. Depending on the success of this promotion, Target will determine whether to extend a similar offer in other markets in future years.

So with all these promotions, increased focus on advertising, extended hours of operations and waning consumer sentiment and likely consumer spending, it would certainly seem as though the retailers will take severe hits to gross profits this holiday shopping season. Keep in mind that the latest read in retail sales for the month of October showed a decline in sales at department stores of greater than 5% versus the same period a year ago. Capital Ladder Advisory Group is avoiding the retail sector for the most part as we gauge the read of the consumer during the early days of the shortened holiday shopping season. With that said, we do see a few short candidates given recent results coupled with the intense pressure on gross profits which is more likely to occur this 4th quarter than in previous 4th quarters. In previous years, when consumer spending was not so heavily impacted by macro issues such as the increased income tax and uncertainty regarding healthcare, in general the retailers did quite well. But this holiday shopping season seems to be coming at the tail-end of an economic cycle which has been preceded by an extensive stretching of the consumer's dollar. Unlike in years past, we may finally see a clear winner and a clear loser or losers this holiday shopping season. The level of discounting and promoting is mirroring the consumer's unwillingness to spend on discretionary goods. By and large, retailers like Wal-Mart, Target, Best Buy and Bed Bath and Beyond (NASDAQ:BBBY) sell a majority of discretionary goods.

The brick-and-mortar retailers, as noted above, are committing a good deal of resources to gaining sales online as it sees this channel continuing to gain market share year-over-year. This holiday season, online sales are likely to be the shining star.

ShopperTrak revised its holiday traffic expectations lower as a result of new methodology. It now expects 10% fewer shoppers to visit bricks-and-mortar stores in November and December than last year. The retail analytics provider had originally predicted that in-store traffic would decline 1.4% for the holiday season. ShopperTrak had revised its methodology for tracking traffic by expanding its data to include more stores and categories, including dollar stores, home furnishings, sporting goods, office supply, gifts stores and mass merchandise along with the already tracked apparel and accessories, wireless and electronics and enclosed mall sectors, it said in a release.

ShopperTrak specifically expects traffic in electronics and appliance stores to fall by 11.5% compared to 2012; however, retail traffic in apparel and accessories is expected to rise 5%.

Same-store sales growth at the nation's retail chains is expected to rise just 1.8% for the third-quarter, according to Thomson Reuters. According to the latest report by the Commerce Department released on Friday, U.S. retail e-commerce sales rose 3.6% from the second-quarter, and 17.5% from a year ago earlier to $67 billion.

Amazon (NASDAQ:AMZN) supported a good portion of U.S. e-commerce sales, as third-quarter revenue jumped 24% to $17 billion. Sales for the fourth-quarter are expected to come in between $23.5 billion and $26.5 billion fueled by the holiday season. Amazon said earlier this month that it partnered with the U.S. Postal Service to start making Sunday package deliveries. Amazon could be one of the clear-cut winners this holiday shopping season.

Source: Wal-Mart And Target Feel Pressure To Promote And Discount In Shortened Holiday Season