Merchants in the Spokane area say they've selectively increased their holiday inventory this year for a gift-giving season that many retailers are expecting to show slightly merrier sales volumes.

Helping to bolster optimism is a sharp increase in bus tours coming to Spokane from Canada and Montana, in some cases with the sole purpose of shopping. Also, an aggressive push by national retailers with Inland Northwest outlets—Macy's, Sears, Target, and Best Buy, among many others—is planned. Many have announced they will open at midnight on the day after Thanksgiving to jumpstart Black Friday, and some smaller mall shops plan to follow suit with earlier hours as well.

The National Retail Federation forecasts that holiday retail sales are expected to rise by 2.8 percent this year, compared with last year. While that's lower than the 5.2 percent increase that U.S. stores experienced last year—a surprising increase that was more than double what the retail federation had forecast—this year's activity is expected to outpace slightly the 2.6 percent average rate of holiday sales growth during the past 10 years.

River Park Square, at 808 W. Main downtown, forecasts strong fourth-quarter activity for its merchants, says Bryn West, the mall's general manager.

"For River Park Square as a whole, we're expecting to be on par with the national level, especially with some of the new stores we have on board," West says.

Those stores include The North Face store, an outdoor apparel and equipment outfitter; Apricot Lane, a celebrity-inspired fashion boutique; and Vivo, which sells young women's apparel. The Apple Inc. store on River Park Square's first level is just over a year old, entering its second holiday season.

The mall also received more requests from retailers to set up free-standing kiosks that sit alongside River Park Square's walkways, including one for the first time to sell Eastern Washington University's apparel and gifts.

River Park Square is owned by the Cowles Co., which also owns the Journal of Business.

As an example of an apparent uptick in retail traffic, River Park Square expects a total of 13 bus tour groups to stop by its mall this holiday season, compared with three bus groups last year, says Elizabeth Mills, River Park Square marketing director. They include groups from Canada and Montana, among other outlying areas.

Dana Haynes, communications director for the Spokane Regional Convention & Visitors Bureau, adds that Spokane draws residents from those areas because it's considered to be the largest retail center between Seattle and Minneapolis. Some groups are booked for a stop at the mall as part of a Broadway show package, while others are Canadian military families visiting downtown to shop.

Haynes adds that each bus tour participant spends an average of $1,000.

Meanwhile, Spokane retailers say that while they've stocked more inventory this season compared with last year, they're carefully considering those items based on recent trends of shoppers seeking more functional, quality, or lower price-range gifts.

"People are more tuned into buying functional products, something that can improve themselves or their lives," says Rick Ericksen, co-owner at Halpin's, a Spokane Valley store and pharmacy with gifts, collectibles, and year-round Christmas items.

Ericksen says the store, at 11406 E. Sprague, has mailed three gift catalogs in recent weeks to customers with positive responses. Halpin's plans to send out two additional catalogs before Dec. 25, he adds.

While he says the store's sales were down each year since 2008, he expects that Halpin's will see revenue improve by at least 3 percent for all of 2011, based on recent retail activity. In general, he says, about 80 percent of the company's annual sales occur in the fourth quarter.

However, Ericksen says the store carries far fewer collectibles than years past. Instead, items such as scarves, hats and fashion jewelry are gaining in popularity.

While Halpin's stills stocks artist Thomas Kincaide's line of paintings and collectibles, Precious Moments figurines, and other collectibles, formally popular pieces such as the hand-painted glassware of the Fenton Art Glass Co. are being phased out.

"Collectibles as a general gift category is in the gutter," Ericksen says.

For The Kitchen Engine, inside the Flour Mill retail complex, at 621 W. Mallon north of downtown Spokane, co-owner Eric Frickle says he noticed a shift last year that's making it more challenging to predict exactly what to stock this holiday season. The store carries cooking products from small kitchen gadgets and specialty recipe ingredients to high-end cookware.

"Last year was good, but what people normally shop for was different," Frickle says. "You can usually rely on selling a lot of everything, but last year, it was a lot of smaller items, the lower priced items. People still spent about the same, but for a lot of smaller items."

He adds, "We sold a lot of kitchen gadgets, and I think people were trying to make their dollars go further. We were kind of lopsided with all the high-end stuff (left over)."

Still, he says he isn't going to abandon stocking full lines of the higher-end cookware this year.

"I'm not going the other direction because it could change this year, but it's got me thinking about what to stock up with for this year," he says.

Frickle says the business saw about a 12 percent increase in sales for 2010 compared with the previous year. However, he adds that this year's results during the fourth quarter are more difficult to project, because the store isn't scheduled to be open on the Saturday that's Christmas Eve.

"Christmas Eve is on a Saturday this year, so we're losing a big shopping day," Frickle says. "We've had a hard time projecting what that will do for business. I'm hoping for the neighborhood of 7 to 10 percent year-over-year increase."

Chris O'Harra, owner of Auntie's Bookstore at 402 W. Main downtown, says she just hopes to bring sales at least up to last year's total, or "even a 2 percent increase."

The store has expanded its inventory to include more merchandise tying into literature, such as book-themed T-shirts. Also, she says the store also has "really beefed up" its stock this year of perennially favorite books and classics that have sold well, in addition to the latest best sellers.

"I think people are looking for that solid value," O'Harra says. To attract foot traffic to the store, Auntie's has added food samples while shoppers browse, such as cupcakes that match a recipe book.

"We're planning a lot of activities to draw people in and entertain them while they're shopping," she says. "We're concentrating so much on the holiday season because it has been a dismal year. I'm optimistic that people will think a book is the best gift."

She adds that popular e-readers such as the Kindle have cut into book store sales. Her store sells e-books for those devices, "but you can't live on that; there's not much margin there."