CHICAGO (AP) — 'Twas the week before Christmas and despite all the sales, fewer presents were shipping to shoppers by mail.

This year's dismal holiday shopping season is producing more peril than poetry for merchants hoping to eke out a profit, even for online retailers, who'd grown accustomed to seeing sales grow 25 percent or more each year.

Amid the worst sales atmosphere in decades, more than three-quarters of online merchants will offer free shipping at some point this season, culminating for many on so-called "Free Shipping Friday," on December 19 — the last day many web sites guarantee on-time ground delivery for Christmas, according to data from the National Retail Federation.

Experts say those efforts may be the saving grace for Internet sales, which are backtracking to hold steady at $29.2 billion this season, according to forecasts by comScore Inc. Sales at established brick and mortar stores are expected to be down one percent compared with last year.

"The economy is in a very bad way and every sector, every segment, every distribution channel, every everything is taking a hit," said Donna Hoffman, a marketing professor at the University of California, Riverside, who is co-director for the school's Sloan Centre for Internet Retailing.

"I think the most significant tactic retailers have in their arsenal is free shipping," she said. "Offer free shipping and it really stimulates sales."

Liberal offers were commonplace around "Cyber Monday" — the Monday after Thanksgiving and the unofficial kick-off for the busiest season online as well as off. Merchants showcased free shipping, financing options and deals like $10 off purchases of $50 or more, as well as traditional promotions.

When preliminary data showed a stronger-than-expected start to the season, retailers began scaling back their promotions. But then their sales slipped. Now, they're bombarding last-minute shoppers with markdowns and shipping offers.

Among them:

— Old Navy, the Gap Inc. subsidiary, is offering online shoppers up to 60 percent off;

— Online jeweller BlueNile.com is sending "Daily Gem" e-mails to customers during December, alerting them to new specials each day;

— Shoe store Zappos.com, clothing retailer J.Crew and others are blasting e-mails to shoppers about free shipping, including free two-day service at bag retailer Timbuk2;

— BlueFly.com, the designer-goods discounter, is cutting its fee for expedited shipping.

Many online retailers also are giving procrastinators extra wiggle room, offering Christmas Eve delivery on purchases made as late at 5 p.m. EST on December 23. For instance, Wal-Mart yesterday extended its final shipping deadline to December 22 and is offering standard shipping through December 20.

Chicago pharmacist Daniel Abazia didn't need extra time to order his wife's Christmas present, a new MacBook computer he bought Thanksgiving weekend from BestBuy.com. But the 27-year-old did snag free shipping from the nation's largest consumer electronics chain — an unexpected treat.

"It was nice to know what I wanted and to save the time and frustration of going to the store," he said.

At online powerhouse Amazon.com, free shipping for customers not enrolled in the retailer's "prime" programme, expired on Tuesday, and the cutoff for all standard shipping was Thursday for most shoppers.

Spokeswoman Sally Fouts said the company couldn't comment on sales traffic or predict how much business would come at the last minute.

"I think consumers feel more and more confident this year that they'll get their packages on time," said comScore analyst Andrew Lipsman. "And the promotions give people that security."