Industry sources say David Jones has pallets of clearance stock ready to roll out in the event that management decides to launch post-Christmas sales a week early to boost foot traffic and sales.

Myer is believed to be watching its big rival closely and is likely to pull the trigger on its clearance sale as soon as David Jones makes the first move.

David Jones and Myer have already been discounting more heavily than usual before Christmas to lure ambivalent shoppers into their bricks-and-mortar and online stores.

Last weekend, for example, David Jones was offering 30 per cent off perfumes and cosmetic gift sets, 20 to 30 per cent off womenswear, 60 per cent off sheets and 40 per cent off luggage.

At the same time, Myer was offering 40 per cent off womenswear and lingerie, 25 per cent off childrenswear, 40 per cent off dinner sets and 35 per cent off luggage.

These deep discounts are traditionally available only after Christmas.

"There's no doubt it is a competitive market," said Myer's chief merchandise and marketing officer, Daniel Bracken. "We have promotional activity for our customers right throughout the year and the lead-up to Christmas is no different – and this is what we have always done to support Christmas in our stores."

Big apparel and accessories brands are also considering cutting prices in their own stores and concession stores in the hope of reviving lacklustre consumer demand.

For example, soon-to-be floated jewellery chain Lovisa is offering 30 per cent off store-wide for the next two days.

Analysts say early discounting would bring forward sales, but would squeeze margins at what is usually the most profitable time of the year.

"January is the second most profitable month, but December is the most profitable and you don't necessarily want to hurt margins in that period," one analyst said.

"It's not good for the whole sector if everyone goes earlier."

Hopes that shoppers would spend up big in the remaining two weeks before Christmas were dashed on Tuesday, when the latest Westpac-Melbourne Institute showed consumer confidence had fallen to its lowest level in more than three years.

Westpac chief economist Bill Evans described the 5.7 per cent fall in the consumer sentiment Index, from 96.6 last month to 91.1 this month, as "a very disturbing result".

"Respondents are clearly concerned about the outlook for the economy and job security," he said. "In addition, there is ongoing disillusionment about the May budget, six months after it was announced."

Australia's unemployment edged up slightly to 6.3 per cent in November, lingering at the highest level in more than 12 years, the Australian Bureau of Statistics said on Thursday.

Consumers surveyed by Westpac were most pessimistic about whether it was a good time to buy a big household item, and they were gloomy on the outlook for economic conditions over the next 12 months.

Brokers such as Morgan Stanley believe this Christmas could be the toughest since 2008, when retailers had to discount early to attract shoppers.

"Unemployment is rising, income growth is slowing and the housing tailwind is easing," Morgan Stanley analyst Tom Kierath said in a report late last month.

"Consumer confidence has weakened such that consumers expect to spend the least since 2008."

However, other analysts say it is too early to call this Christmas a disappointment, as consumers have been doing the bulk of their spending later every year for the past few years.

"It's really only now that it starts to matter," one analyst said. "It was OK until about a month ago and it's been soft since then."

Mr Bracken agreed. "There are 13 sleeps to Christmas so there is plenty time left for shopping," he said.

smh.com.au