Stores Cut Holiday Prices, But Will Consumers Bite?

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Mitchell Kaiser, a retail analyst with Piper Jaffray, expects Best Buy's strategies this holiday season to make it one of the few retailers who will be celebrating this year.

“Historically, product cycles trump economic cycles,” he said. Kaiser expects to see strong sales of HDTV and flat-panel televisions, computers, and video games.

Rival Circuit City also could benefit from the strong desire for electronics items. In order to stay at the top of consumers’ minds it has been giving away a Mazada CX-9 each day in November. The retailer also is offering customer 0% financing rather than cut prices further.

Wal-Mart’s Sam’s Club also is using contests, with give-aways to Nascar events, a NASA launch and other “once in a lifetime” events.

With all the interest in gift cards, retailers also are looking for ways to attract customers by making the presentation of the gift card more than just an afterthought.

Macy’s is allowing customers to personalize gift cards with photographs. Others are finding different ways to package them. For example, Land’s End is shipping gift cards of $25 or more in a miniature version of their signature canvas tote bag.

Retailers also are planning to maximize that second wave of holiday sales that occurs after the Christmas holiday. They will be restocking the shelves with fresh merchandise for this period. This is especially true of apparel retailers, who are expected to push hard to win customers during that period.

Christina Cheddar Berk is a News Editor at CNBC.com. She can be reached at [e-mail].