Hawai'i retailers are bracing for a tough holiday shopping season that formally begins today, Black Friday, but merchants are also better prepared this year to confront what many expect will be consumer spending cutbacks.

"When it's all said and done, it's going to be tough," said Jack Pomeroy, owner of 21 retail stores statewide operating under names that include Elephant Walk, By the Sea, True Friends, Soul Lei and Del Sol.

The National Retail Federation predicts that efforts by consumers to reduce spending, seek out discounts, give gifts jointly and reuse last year's decorations will help produce a 1 percent decline in holiday sales nationally.

If accurate, the small decrease would still represent considerable pain for merchants given that last year's decrease in sales — a 3.4 percent drop — was among the worst in history.

"As the global economy continues to recover from the worst economic crisis most retailers have ever seen, Americans will focus primarily on practical gifts and shop on a budget this holiday season," Rosalind Wells, chief economist for the trade association, said in a statement.

Michelle Harris and fiance Fred Kaohe of Hawai'i Kai said they haven't experienced job or wage cuts that are leading many residents to dial back spending, but they will still try to spend less on holiday shopping this season, particularly by seeking out deep discounts.

"We got good deals doing that last year," Kaohe said about predawn shopping on Black Friday.

"It was totally worth it," Harris added. "I think we'll do that again."

Generally, national retail spending forecasts are gloomy, though some present rays of hope.

On the more positive side, the International Council of Shopping Centers expects holiday sales will rise 1 percent to 2 percent this year because economic growth is fundamentally on the mend and is producing what the group is calling the first non-recession holiday season in three years.

But some retailers believe negative influences, such as consumer confidence that remains very low and employment that continues to decline, will drag down holiday sales.

"Job losses and uncertainty about the future are making for a very frugal shopper," said Lynn Franco, a director at the Conference Board, which measures consumer confidence. "Consumers are approaching the holiday season very cautiously."

TOURISM'S IMPACT

Tourist spending, another important customer base for many Hawai'i retailers, has yet to increase despite the decline in visitor arrivals leveling off or rising slightly in recent months. Continued weakness in visitor spending could add to holiday woes for local retailers, though much of the decline to the figure has to do with lower hotel room rates.

Arianne and David Jolly, visitors from Sydney, Australia, who regularly stay in Hawai'i during the Thanksgiving holiday, said they anticipate spending more this year shopping because of a good exchange rate and generous sales.

On Monday, David Jolly bought a Georg Jensen watch at the Halekulani hotel for $700, or 70 percent off its advertised price of nearly $2,500.

"That's just amazing," Arianne said. "You'd never see a price like that in Australia."

"We come with empty suitcases," David added. "The only thing that stops us is how much we can carry on the plane."

Much of the tone of this year's holiday shopping season, which can account for more than 25 percent of annual sales for some retailers, has already been set with big promotions by major national chains including Macy's, Target and the Disney Store promoting door-buster specials in stores today. At least one retailer, RadioShack, tried luring shoppers yesterday with stores open on Thanksgiving.

'BUSINESS IS TOUGH'

It remains to be seen whether the effort by some retailers clamoring for an early boost in sales will succeed. The Conference Board expects shoppers will be more inclined to hold out in anticipation of big discounts close to Christmas.

Some retail analysts say consumers may be disappointed by this strategy because merchants have prepared well to meet demand without emergency discounting compared with last year when the economic crisis surprised retailers that had to slash prices to get rid of inventory.

Karen Sotomura, a local designer and importer of Christmas ornaments distributed nationally and sold locally through seasonal Santa's Pen stores, said her wholesale customers are buying less this year but she is expecting holiday sales to be better than last year.

"I think it's going to be a strong Christmas, but I think it's going to be a short and late (shopping season)," she said.

Sotomura is operating two Santa's Pen stores in temporary locations at Ward Entertainment Center and Pearlridge Center. That's down from four stores last year, but she said the reduction is because there was less attractive empty space available at malls this year.

"It should be a strong season," she said. "People will still buy."

Pomeroy isn't so sure. He said sales during the first few weeks of November haven't been as strong as last year. He'd like to believe that a trend of lower sales won't continue, but he is doubtful.

"My experience teaches me it never gets good enough at the end to make up for a weak beginning," he said. "Business is tough."