With interest rates lower, inflation collapsing and wages rising faster than prices, there's potential for a very happy holiday for U.S. retailers.

But it's not time to celebrate yet. Even as the first deals kick off next week from Amazon.com Inc., Walmart Inc. and Target Corp, lowerto middle earners are still struggling to shake off the pain of the past few years, the presidential election looms over some key shopping weeks and the East and Gulf Coast ports have been on strike. For those without compelling prices or products, or who lack the agility to navigate these seasonal challenges, it might not be such a fun sleigh ride.

With consumers staying picky, sellers will need to ensure their selections resonate with their customers, that they deliver impeccable value for money and that their in-store seasonal displays are eye-catching enough to stimulate sales. Of course, that should all be Retail 101. But absolutely nailing these attributes will be more important than ever and will separate the winners from losers.

There's some evidence to suggest that consumers are ready to splash out more than they did last holiday. Back-to-school spending was solid, up 2.6% from 2023, according to retail research group GlobalData. Then there are the macro forces: Not just cheaper borrowing costs and tamer inflation, but savings that remain above pre-Covid norms, markets that are recovering from their August dip and employment numbers that are broadly holding up.

Consequently, estimates of holiday spending are coalescing around a 3% increase on 2023. However, reflecting the lingering uncertainties, that's below the 10-year average of about 5%, according to Bain&Co.

In-person shopping roared back after the pandemic, but online spending will account for the vast majority of the overall growth this year. This is because Bain is pointing to a 9.5% increase in non-store sales, while in-store spending -- though still accounting for the bulk of sales -- is expected to rise by just 0.5%. And of course inflation, although diminished, will also bolster the dollar sales numbers.

While retailers might have hoped for an even stronger prediction, consumers -- particularly lower- to middle-income Americans -- are bruised from the past few years. Food prices, for example, are about 30% higher than before the pandemic, according to Bloomberg Intelligence. Last month, Kroger Co said some budget-conscious shoppers were staying thrifty: buying cheaper cuts of meat and spending more immediately after payday only to cut back as the month wore on.

Just as it took some time for the realities of soaring inflation and borrowing costs to set in, there may be a lag between their easing and looser purse strings. For the holiday season, this means there is no room in stores' selections for ugly clothing, tacky gifts or festive food that doesn't delight diners.

Consumers also want their dollars to stretch further, either out of necessity or because savings can be used to splurge on the things they prioritize, such as concert tickets.

Of course, bargain hunting is an American tradition. But price and promotion are the top considerations among U.S. consumers this holiday season, up five percentage points from last year, according to a survey from Boston Consulting Group.

Then there is the shape of this so-called "golden quarter," so named because it is the most revenue-driving and profitable three months of the year. October has been the new November since Amazon introduced a Prime Day bargain bonanza in the month in 2020. It has been joined by other names, including Walmart and Target, which are also unleashing deals on products including tech, toys, home furnishings, fashion and beauty. This has pulled holiday spending forward from November, when Black Friday deals traditionally took place.

But this year's offers will be fighting for consumers' attention -- especially during the key month of October, which is likely to be awash with noisy election coverage. Any kind of uncertainty is never good for spending. And in November, a late Thanksgiving means five fewer shopping days during what remains the busiest period for store chains. Retailers can ill afford anything but full shelves and on-time deliveries after that holiday, particularly if pent-up demand is released after the election.

While most companies are already navigating Red Sea shipping delays, the East and Gulf coasts port strike is more challenging. Although the stoppage has been suspended, there could be knock-on effects. Costco Wholesale Corp. told Bloomberg News last week that it had some holiday items shipped to port earlier than usual to avoid disruption and had contingency plans in place, such as shipping to different locations. Some U.S. shoppers have already been stocking up on essentials.

Given these potential headaches, there is unlikely to be enough festive cheer for every retailer. Those marrying needs and wants, such as Walmart and Costco, look best placed. If you are already visiting for essentials, it's easy to add a gift or tree trim. Doing so each week can spread the cost.

It helps that both offer good value for money. Indeed, other bargain basement retailers, such as TJ Maxx owner TJX Cos Inc., should be in the winners' camp. The off-price chain may benefit from a supply of more upmarket products amid a pullback in luxury.

In contrast, department stores look challenged, under pressure from both online competitors and resurgent store-based rivals, from Gap Inc. to Abercrombie & Fitch Co. Inditex's Zara is expanding in the U.S., while sister brand Massimo Dutti will reenter the American market with a store in Miami in time for peak holiday season. At the top end, the appetite for designer fashion and handbags remains depressed, according to Citigroup's credit card data.

Of course, betting against the U.S. consumer has proved a losing strategy. Despite predictions of doom, retail sales have held up better than expected.

As store chains prepare for this crucial trading period, they -- and their investors -- will be hoping that Americans' propensity to hit the mall or tap the buy button will be the holiday gift that keeps on givin

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.