Holiday sales outlook hinges on bargains

NEW YORK (CNNMoney.com) -- As the holidays approach, consumers are getting back in the buying mood, but only if the price is right.

Holiday retail sales are expected to increase 2.3% this year to $447.1 billion, according to a study released Wednesday by the National Retail Federation.

The rise marks an improvement from last year's 0.4% uptick, but is still below the ten-year average holiday sales increase of 2.5%. Overall sales have been choppy so far this year as concerns about the economic recovery abound.

"While consumers have shown they are once again willing to spend on what's important to them, they will still be very conscientious about price," federation chief economist Jack Kleinhenz said in a statement. "Retailers are expected to compensate for this fundamental shift in shopper mentality by offering significant promotions throughout the holiday season and emphasizing value throughout their marketing efforts."

Retailers will likely keep their inventories lean to limit their exposure to excess merchandise and unplanned markdowns, the NRF said.

"Though the retail industry is on stronger footing than last year, companies are closely watching key economic indicators like employment and consumer confidence before getting too optimistic that the recession is behind them," said Matthew Shay, the retail group's president.