CONSUMER confidence is up, and interest rates down since last year's festive season, but this has done little to cheer up the big retailers ahead of the Christmas sales that will largely define their fortunes for the year.
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This week, Harvey Norman founder Gerry Harvey said he expected some rivals to collapse once the clearance sales were over in the new year.
He said the performance of his business depended on the warm weather.
''If we have a really hot period and we sell a lot of airconditioners, then we'll definitely beat last year,'' he said. ''If it's cold every day then we'll battle.''
AMP Capital's chief economist, Shane Oliver, said it looked as though Christmas spending would be ''OK, but still not great''.
''Consumer confidence is up from its lows and interest rates are down, with hopefully the RBA likely to deliver another cut next week,'' he said. ''But against this - job insecurity, wariness about excessive debt, and reduced levels of wealth, are continuing to keep consumers a bit cautious.''
David Jones and Myer agree on their prospects for Christmas, expecting sales to do little more than match last year.
''We have to work hard to stay still, is probably the best way to describe it,'' David Jones chief executive Paul Zahra said last week.
His counterpart at Myer, Bernie Brookes, said: ''We are looking for Christmas to be at least flat, maybe better, and have bought stock on that basis and have done our planning on that basis.''
Both stores have upgraded their online presence recently and are wrestling with the big global brands to try to reduce prices.
Commonwealth Bank said that based on the credit card data it collected from its customers, it was clear that Australian consumers had gravitated towards new overseas market entrants such as Zara, La Senza Gap and Topshop, as well as purely online players.
An eBay spokesman, Sandy Culkoff, said the company was expecting double-digit growth from last year's record performance. On one day alone, Sunday, December 11, last year, eBay reported that more than 1.8 million visited its site and bought more than 250,000 items.
Even a local success story such as Oroton, which gets more than 10 per cent of its sales online, was surprisingly cautious, with chief executive Sally Macdonald saying the company's strong performance since midyear was ''not a meaningful indicator'' of the year ahead.
She said the company was ''cautiously optimistic'' about the Christmas and Chinese New Year trading period.
A similar sentiment was expressed by Kathmandu, which also reported strong sales, and JB Hi-Fi.
But online and foreign rivals are not the only competition. Experts have pointed out that it is retail spending that has been weak, not the consumer, shown by the amount of money being spent on overseas travel.
