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By Jason Stipp and R.J. Hottovy, CFA | 11-23-2012 08:00 AM

A Good, But Not Great, Holiday for Retailers

Tough comparisons from 2011 plus stiffer price competition will translate to about 3%-4% growth in holiday sales this year, says Morningstar's director of consumer equity research.

Jason Stipp: I'm Jason Stipp for Morningstar. It's Black Friday today kicking off the official retail holiday shopping season, though I think some retailers got a jumpstart this season.

Here to talk about the prospects for retailers on the holiday shopping is R.J. Hottovy, our director of consumer equity Research.

Thanks for joining me, R.J.

R.J. Hottovy: Thanks, Jason.

Stipp: First question, we have seen retailers opening on Thanksgiving, I saw an ad for "all November Black Fridays." Is the importance of this one single day to retailers diminished over time?

Hottovy: I think so. What we've seen over the last couple years is that, as you mentioned, retailers are starting earlier and earlier in the holiday season, but there is still a strong emotional attachment with the phrase "Black Friday," and so what we see is a lot of retailers trying to capitalize on that, starting Black Friday sales as early as October, and we're starting to see that from more and more different retailers too, not just bricks-and-mortar retailers, but we've been seeing it from Amazon and a lot of the online players as well.

Stipp: The National Retail Federation put a report out, and they said they expect a little over 4% growth this holiday season. Does that jibe with what you're expecting for holiday retail sale receipts?

Hottovy: Generally what Morningstar is expecting is between 3% and 4% growth this holiday season. We're categorizing it as a good but not great holiday season. Last year was a pretty strong holiday season from Black Friday through Christmas.

This year we think that when you're lapping those tough comparisons, plus combined with all price competition that we’re going to see in the market this year. A number of retailers--Best Buy, Target, Walmart--have all announced price matching initiatives to varying degrees. When you throw that all together, it's probably going to be a 3%-4% growth year, but not quite as strong as we saw last year.

Stipp: So, good but not great. When you look under the surface, though, are there any areas … of particular strength for certain types of goods or certain types of retailers, and any areas that might be a little bit weaker?

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