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It’s the holiday homestretch, and stores are betting on deep discounts to propel them to the finish.

This story first appeared in the December 21, 2010 issue of WWD. Subscribe Today.

Retailers are trying to lure the growing constituency of last-minute, channel-shifting, bargain-hunting shoppers.

The outlook remains positive, with Customer Growth Partners among the most optimistic research companies, revising its holiday sales projection upward to 8 percent compared with last year, from 5.5 percent just two weeks ago. Profit margins are still a guessing game as retailers promote heavily, with reductions on Wednesday expected to reach 65 percent, from 50 percent at the beginning of the week.

Major department stores are said to be planning post-Christmas sales of 75 percent off already-reduced merchandise.

It’s clearly easier to be a couch potato or procrastinator this season with the explosion of e-commerce and mobile commerce platforms. Online spending during the holiday period from Nov. 1 through Dec. 17 is up 12 percent versus the year-ago period, according to ComScore. Meanwhile, mobile commerce is expected to grow to $3.4 billion by yearend from $1.4 billion in 2009, a 134 percent increase, according to ABI Research. “Mobile now represents more than 10 percent of our business, whereas 90 days ago it was virtually zero,” said Greg Bettinelli, senior vice president of marketing at HauteLook, a flash sale site. “We released a significant functionality in mid-October, reconfigured our Web site to work better on all mobile devices and relaunched our iPhone app. We’ve seen a huge lift across the board. Consumers can do more because they have the device in their handbag or pocket. This is not a small thing anymore.”

HauteLook has experienced shoppers increasingly open to particular platforms. For example, more than one-quarter of its sales on Dec. 7 came from a 48-hour Facebook-only sale of Diane von Furstenberg merchandise.

Rue La La, another flash sale site, has also seen shoppers embrace mobile commerce. “Holiday mobile sales are 16 percent to 19 percent of our business, up from 2 percent or 3 percent last year,” said Ben Fischman, chief executive officer of Rue La La. “Our members are using mobile in a massive way.” Fischman said mobile is growing because consumers are using more sophisticated devices, including Android smartphones and the iPhone. “Retailers and e-tailers have developed more shoppable apps for mobile devices,” he said. “We’re now applying things we learned through mobile to our Web site. For fashion in particular, mobile apps have helped take the user experience one step forward. It provides incredible convenience because we are always armed with our communications devices, wherever we are. The other piece of mobile is the ability to do ‘push’ notifications. We offer push alerts so members can be notified of certain sales. When a boutique takes place, their phone will vibrate in their pocket.”

J.C. Penney is also bullish about mobile commerce. “This holiday season really represents the front end of true mobile commerce adoption, so it was very important to have a mobile commerce play out there,” said a spokesman. “Obviously, the best learnings happen during the periods of biggest sales volume, so we wanted to be able to learn from our customers this season.” Penney’s app includes location-based check-in, deals and a special coupon delivered to the customer’s phone just for checking in. In addition to browsing holiday circulars, items can be purchased directly from the mobile device. There’s also an iAd gift-hunting game app for the iPad or iPhone that encourages shoppers to browse through items with the possibility of uncovering a $10 to $50 coupon.

“Consumers have adjusted to the environment, and we feel that our customers are responding to price but also to newness and innovation. The economy is gradually improving,” said the Penney’s spokesman. “They are more receptive to the idea of opening up their wallets and spending. While consumers remain cautious, they are aspirational and want exciting, meaningful gifts. ” Examples of aspirational gifts include apparel by MNG by Mango, Liz Claiborne and Claiborne, and beauty and fragrances from Sephora inside J.C. Penney, the spokesman said. Penney’s is also highlighting unique gifts such as the Execuheli remote-control helicopter and Sharper Image U-Video camera. There’s also a new gift category, the iHome collection, with iHome portable speakers and iHome app-enhanced alarm clock docks.

Target cited mobile features such as the weekly ad, lists, registries, Daily Deals, sales text alerts and gift guides as driving increased interest in mobile shopping this holiday season. “Guests also can purchase gifts directly from their mobile device, download the Target iPhone or Android app and sign up for scannable mobile coupons at,” said a spokeswoman.

Top categories at Target include electronics such as the iPod Touch, iPad, Kindle, Kinect and PlayStation Move; toys like Sing-a-ma-jigs, Squinkies, Lallaloopsy, Leapster Explorer, Loopz and Scrabble Flash; games including Call of Duty, Donkey Kong Country Returns and Just Dance, and entertainment. Consumers this week can trade in used cell phones, video games and iPods at Target Mobile centers to receive credit toward any Target purchase. “Popular items in our apparel departments have been knit bottoms and tops, as well as kids clothing,” the spokeswoman said. “William Rast for Target arrived in stores on Sunday. Early standouts include plaid shirts for men and women and twill jackets.”

Target has been offering suggestions for last-minute-gift-challenged shoppers, and they’ve been responding. The retailer rounded up the top 25 gifts under $25, including a Sonia Kashuk five-piece Shimmer & Shine set for $12.99; Pixi Petit Palettes, $9.99; Lego gift cards, $5 to $2,000 in stores and $5 to $1,000 online; “Polar Express” DVD, $13; Mulberry for Target mini messenger, $14.99, and Mossimo dark-rinse jeggings, $19.99.

Macy’ advertised an extra 20 percent off, taken at checkout. A Charter Club long-sleeve argyle cardigan was $60, reduced to $24.99, and a Style & Co. long-sleeve color block turtleneck sweater had the “every day low price” of $19.99.

Bloomingdale’s Web site offered an additional 15 percent off at checkout and included Aqua cashmere hooded cardigans for $79.20 from $198; Theory’s striped Dorothea cashmere sweater dress, $177 from $295, and Andrew Marc’s zip front jacket with fur-trimmed hood, $207.90 from $495.

“The best deals will be sweaters and outerwear because they had such a late start,” said Marshal Cohen, chief industry analyst at The NPD Group. “Sportswear seems to be enjoying really good business. The hottest categories are contemporary and missy dresses and skirts. By Wednesday, sportswear will be marked down for the first time this season. I’m already beginning to see sale signs going 50 percent off to 65 percent off,” Cohen continued, speaking from a shopping mall. “[Stores] are putting stickers over the signs. Inventories, in certain selected styles, are getting depleted. Retailers will have to make the sales deeper, because when styles are that broken, it’s tough to sell. The big retailers like Wal-Mart and Kohl’s will start offering up bigger deals around Wednesday.”

Some small specialty retailers complained that department store promotions have forced them to compete more aggressively on price.

“Certainly, we started off the season with a lot of competition from the majors doing markdowns,” said Stacey Pecor, founder of Olive & Bette’s. “That put a little bit of a damper on the specialty store business.”

Pecor said the promotions may have to rethink the resources she sells. “If [vendors] can’t hold the line on prices and are not willing to not sell to [department stores,] I’m not going buy to their holiday lines,” she said. “At the end of the day, if you’re going to sell to discounters, it’s going to water down your brand, and my customers won’t want those brands. How are specialty stores going to deal with this? It took a big chunk out of our business at the beginning of December.” Pecor said sales last week were good, up 9 percent over last year, and 2009 “was our best December. Outwear is soft, but my sweater business is phenomenal.”