For retailers, the scramble to unload too much inventory has been intensified by the calendar this year—which offers six fewer shopping days between Thanksgiving and the end of the year.
That prompted retailers to kick off holiday promotions weeks earlier than usual.
For the first time in memory, retailers launched holiday ad campaigns featuring laughing Santas and snow-covered Christmas trees weeks before Thanksgiving promotions. Kmart began running holiday ads in September. They didn't wait to cut prices either.
For consumers, the retail industry's overstock headache is creating some epic bargains.
Wal-Mart began cutting prices in September, and has been relentlessly pressuring competitors to match them. Toys R Us that month said it would match any competitors' price cuts and offered $100 to loyal customers who bought toys before Oct. 31.
For Black Friday, Target is offering deals that include 55 percent off the price of some Nikon digital cameras and 60 percent off Nerf Hail-Fire Blasters. At J.C. Penney, you can pick up a Cindy Crawford duvet cover for half price or some Everyday white dinnerware for 60 percent off.
As holiday sales projections began weakening earlier this year, some retailers cut back on shipments. But canceling orders late in the game can still leave a retailer with too much slow-moving merchandise.
"There might have been some product that you needed and you were low but the number crunchers say 'We have to stay within a certain level of inventory,'" said Edelman. "You may be where you want in total inventory, but you might have too little of the good stuff and too much of the bad stuff."
The inventory backup is hitting some product segments harder than others.
"Apparel in general is just massively over-inventoried and you're going to see big promotions through Black Friday and through the holidays," said Kernan. "You've got to get rid of inventory fast. Nobody wants to be sitting on carryover inventory into the new year, so you're going to be seeing gangbuster promotions through Christmas."
Those promotions also vary by product category—depending on how durable demand for an item will be after the last gifts are unwrapped. Demand for TVs holds up better into the new year than winter scarves.
"If Best Buy has too much inventory of a certain sized TV, they just won't replenish it that much in the first quarter," said Edelman. "But if you talking about the newest, hottest game or console, that item has a timeliness and obsolescence factor because anyone who wanted to buy that as a gift has already bought it."
(Read more: Black Friday shoppers beware—the 12 scams of Christmas)
Promotions are also expected to vary widely from one store to the next, depending on how badly overstocked they are.
Abercrombie & Fitch is awash in destroyed skinny jeans and quilted warrior parkas, according to Kernan, which may help explain why you can buy anything in the store for 40 percent off. This year, A&F's inventories are running 25 percent ahead of sales compared with last year, according to Kernan's estimates. Among the companies he follows, inventory growth is also outpacing sales at Men's Wearhouse, Guess, Gap, American Eagle Outfitters, TJX andAeropostale, he estimates.