Stores are hoping that the surprising sales uptick last month is a sign the consumer will be strong in the coming weeks. Retail sales (excluding autos) were up 0.4% in October compared September, despite the 16-day government shutdown. Consumers were undeterred then and shops are hoping they'll be more determined than ever as they now flood stores.
Adding a wrench for stores is the fact that this will be the shortest shopping seasons since 2002. "It's going to make the risks even higher and the stakes even higher," says Eric Beder, retail and consumer products analyst at Brean Capital.
This also changes the game for shoppers, according to Beder.
"When you look at it, the consumer also has six less days to shop, too," says Beder. "What we've seen that historically, consumers had to wait until the end to get the best bargains. [The shorter season] is going to make that a little bit tougher. I think it's going to make the sales more intense and I think it's going to make the entire season much more aggressive."
And, don't expect the recent drop in temperatures in some parts of the US to cause a drop in sales, notes Beder. In fact, stores may be looking forward to it. "It sells a lot of sweaters [and] it sells a lot of coats," says Beder. "Actually, the weather has been a nice positive."
Meanwhile, the world's largest retailer, Wal-Mart, is offering significant discounts during the season. Obviously, they won't be alone but the magnitude of the sales may higher this year than last.
"This year, everyone's going to offer some level of discounts," says Beder. "I think you're going to see sales here at the level of last year or maybe even a little bit higher. If you're looking for a bargain, you're going to find it."
As retailers sell stocking-stuffers to shoppers, Beder thinks stock shoppers should look at two retail companies for their portfolios. One is American Eagle Outfitters.
"That's actually the only teen retailer that we would invest in right now," says Beder. "It's by far the best-run teen retailer and expectations are very low. We think they'll be able to beat them."
For those looking to invest in the jewelry and accessories space, Beder believes Signet Jewelers is also a buy. "This company is the leading jeweler like Kay Jewelers and Jared," says Beder. "I think it's done a great job of leveraging their own products. I think that's going to help drive traffic here, especially for that higher-end consumer who wants that special something for their significant other."
To see the rest of Beder's take on this holiday shopping season, watch the video above.
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