Retailers open early to ‘huge’ holiday shoppers

Bloomberg News

Friday, November 24, 2006

U.S. retailers opened to "huge" numbers of shoppers as they offered early-bird specials and staged stunts to kick off the holiday shopping season today.

Wal-Mart Stores Inc., the world’s largest retailer, opened at 5 a.m. with 42-inch plasma TVs for under $1,000 and cashmere sweaters for $29 for the first six hours. Target Corp. hired magician David Blaine to escape from shackles while dangling five stories over New York’s Times Square to draw attention to a two-day sale starting today.

The longer hours and price cuts may help retailers raise holiday sales 5 percent this year to $457 billion, according to the National Retail Federation. The season starts the day after Thanksgiving, called Black Friday because at one time it was

considered the day retailers turned profitable for the year. It will probably be the second-biggest shopping day this year.

"It is a huge day for traffic," NRF President Tracy Mullin said in a statement today. Retailers are "encouraged by the amount of excitement and traffic that their Black Friday promotions have generated."

Wal-Mart, out of the gate earlier and more aggressively than last year, put electronics on sale three weeks ago and has since lowered prices on toys, small appliances and food. Kmart, a unit of Hoffman Estates, Illinois-based Sears Holdings Corp., was open on Thanksgiving and offered deals on games and cameras.

Black Friday will be second-busiest shopping day this year after Dec. 23, the Saturday before Christmas, Chicago-based ShopperTrak RCT Corp. predicted Nov. 15. Today may be Federated Department Stores Inc.’s biggest day this year, Chief Executive Officer Terry Lundgren said in an interview. The NRF will release Thanksgiving weekend sales data on Nov. 26.

Up at Midnight

Last year, consumers spent $27.8 billion over the first holiday shopping weekend, the NRF said. About 32 percent of the retail industry’s profit came during the final quarter of 2005, according to the International Council of Shopping Centers.

The number of malls open at midnight this year tripled, operators including Simon Property Group Inc. said. Shoppers such as Donna Barrow of Princeton, Texas, lined up before 12 a.m. today to get a head start on gift buying.

"I figure it’s a lot easier staying up until midnight than it is getting up at 4 a.m.," said Barrow, who was looking for jerseys with Dallas Cowboys football team quarterback Tony Romo’s name at the Allen Premium Outlet mall in Allen, Texas.

Coming Back

Yesterday Wal-Mart posted on its Web site specials on Microsoft Corp.’s Xbox 360 video-game machine and a $30 General Electric Co. microwave oven. The site was down for 20 minutes this morning. Wal-Mart spokeswoman Karen Burk said the company was trying to find out what the situation was.

Best Buy Co., the largest U.S. electronics retailer, opened five hours early at 5 a.m. today and had discounts at its more than 800 stores until noon.

While price-cutting will trim profit on each item sold, retailers aim to compensate by selling more merchandise. They may hold off on offering the best prices until next month, prompting consumers to put off shopping until later in the season, said

Burt Flickinger, managing director of Strategic Resource Group, a New York consulting firm.

Diedra Rhames, a 21-year-old college student from Brooklyn, New York, came off a Target checkout line this morning with essentials such as sheets. "I’m going to come back again when they have some more discounts," she said. "They always do when we get a little closer to Christmas."

New Products

About 137 million Americans planned to shop this weekend, compared with 130 million who planned to a year earlier, according to an NRF survey. Shoppers are planning to spend an average $791.10 each this season, the group said.

New products this year are Mattel Inc.’s T.M.X. Elmo doll, an interactive fuzzy Muppet from the "Sesame Street" children’s show, Microsoft’s Zune music player and Sony Corp.’s PlayStation 3 video-game console.

Delorian Davis of New York emerged from the Toys "R" Us store in Manhattan’s Times Square today with a Fisher-Price dancing Tigger doll.

"I found exactly what I wanted," said Davis, 23, a party decorator. "We checked the Internet and saved $130."

Many shoppers may wait until Nov. 27 to buy online after checking prices at stores over the weekend. Sales on U.S. Internet sites will probably rise 24 percent in November and December to $24 billion, according to ComScore Networks Inc., a Reston, Virginia-based Internet-research company.

Rising Sales

Growing demand for gift cards, which aren’t counted as sales until they’re redeemed, may shift some revenue into the weeks after Christmas. Customers plan to spend $24.8 billion on gift cards to give as presents this year, a 34 percent increase from last year, the NRF said.

Shares of Bentonville, Arkansas-based Wal-Mart, fell 8 cents to $47.95 at 12:30 p.m. in New York Stock Exchange composite trading. Plano, Texas-based J.C. Penney Co. shares declined 23 cents to $80.97, and Target shares lost 58

cents to $57.84.