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Retailers hope Black Friday fervor may set pace for season
By Andria Cheng, MarketWatch
Last Update: 8:45 AM ET Nov 27, 2009
NEW YORK (MarketWatch) -- At the Mall at Wellington Green in Palm Beach County, Fla., free bags of breakfast for the first 500 patrons were gone within 20 minutes after stores opened at 6 a.m.
And within an hour and a half, the big parking lot adjacent to its food court was 100% full.
"This is the busiest I've seen at 7:30 a.m.," said Dorian Bordenave, the mall's general manager. "People are more interested to shop and take advantage of the bargains. It seems like there are much heavier discounts today than we've seen."
Against the backdrop of a still-struggling U.S. economy marked by a 26-year-high jobless rate, retailers from Target Corp. TGT to Best Buy Co. BBY opened their doors earlier than ever or made sure their highest-profile specials -- from the $3 slow cooker at Target to the $197 Hewlett-Packard HPQ laptop at Best Buy -- would be enticing and competitive enough to drive store traffic and set an upbeat tone for the season.
So far, the competitive offerings seem to have worked to bring out bargain-hunting shoppers despite the expectation that the discount level overall for the season won't be as deep as last year because retailers have controlled inventory better to cut back on having to resort to profit-eroding discounts, analysts said.
"Midnight checks show consumers have come to shop yet again," said Jefferies & Co. analyst Randal Konik, adding in a note that traffic to the Tanger Outlets in Riverhead, N.Y., that he visited was about 45 minutes long versus 30 minutes last year. "Most stores looked to have balanced inventory levels, which explains the more rational (promotions) seen this year."
While one day doesn't a season make, Black Friday, as has been the case for several years, is again expected to be the No. 1 shopping day by both foot traffic and sales, generating 6% of the season's turnover, according to the store- and mall-traffic tracker ShopperTrak.
Members of about 26% of all U.S. households plan to shop on Black Friday, up from 24% in 2007, according to a survey by the International Council of Shopping Centers and Goldman Sachs.
It's called Black Friday because it's the date on which retailers are traditionally expected to begin to turn profitable for the year.
According to the National Retail Federation, a trade organization, as many as 134 million people, 4.7% more than last year, will shop this Friday, Saturday or Sunday.
While the foot traffic seen early Friday gave some hope for the industry's biggest selling season, two key questions -- how to sustain the momentum throughout the gift-giving season, and how to get consumers to shell out for things they don't need -- remain to be answered.
'Trying to be more careful'
"I'm not buying them because they are cheap, but because I need them," said Zlatimira Wiltshire, 26, from Brooklyn, who and her husband showed up at Macy's M 34th street flagship in New York before it opened at 5 a.m. and left with four bags -- including a Martha Stewart pot, juicier and mixer -- for a total of $150. "We are trying to be more careful and buy only stuff that we really need."
A case in point, while there were long lines in the shoes, clothes and kitchenware sections, she said a $99 diamond bracelet special at Macy's was sitting barely touched.
Making the weekend's sales even more crucial is survey results indicating shoppers' plan to make their holiday purchases earlier than ever -- a factor that has yet to reveal itself in November.
The International Council of Shopping Centers on Tuesday, in fact, cut its November sales forecast to 4% to 6% growth from a previous sales-growth projection of as much as 8%, according to the council's chief economist, Michael Niemira.
Forecasters are not even agreed on the direction of change for the whole season from last year.
"More people are paying with cash," said Bordenave at the Mall at Wellington Green. "It seems more practical items are being purchased. The stores that are being more promotional have more foot traffic."
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