Long lines of shoppers give retailers hope for season

MarketWatchNovember 26, 2010 


    In South Florida, sale-seekers stampeded into the Dolphin Mall when the clock struck midnight Friday, pouring through seven entrances for eight minutes straight. Read the story at MiamiHerald.com.

    In Charlotte, N.C., the parking lots were filled to capacity before dawn and the roads were jammed. Read the story at CharlotteObserver.com.

    And in Texas, many retailers didn't even wait till Friday. The Toys R Us in Hurst, near Fort Worth, opened its doors at 10 p.m. Thursday. Read the story at star-telegram.com.

NEW YORK — Black Friday traffic and sales indications appeared to be topping expectations, giving an encouraging note that consumers may be more willing to loosen their purse strings as retailers kick off their biggest selling season of the year.

At Macy's Inc.'s flagship in New York's Herald Square, 7,000 shoppers, compared with 5,000 last year, had waited outside before the store opened its doors at 4 a.m., an hour earlier than last year, Chief Executive Terry Lundgren said in an interview with MarketWatch.

In another encouraging sign, while women used to dominate early-morning Black Friday shopping, many younger people and male shoppers have joined the fray, he said. Shoppers also were splurging on items for themselves, buying beyond what's being promoted on items including watches, fragrance and women's boots, he said.

"We are seeing both self-purchases and gift purchases," Lundgren told MarketWatch. Black Friday "is a good indicator if business is good, (and) so far it looks good. If (the flagship) store is an indication of the rest, it looks very good."

Macy's is not alone. Retailers including Target Corp. and Staples Inc. and mall owners such as Taubman said they have seen higher traffic or sales at stores and properties surveyed Friday morning.

At Target, for instance, lines of more than 1,000 were reported at 4 a.m. as shoppers snatched morning specials such as a Westinghouse 40-inch flat-panel TV for $298.

"Our general tone comment — bullish," Stifel Nicolaus & Co. analyst David Schick reported after early-store visits in three states. "It seems consumers are out and ready to spend."

The analyst said that might translate to a 4 percent or 5 percent holiday-spending increase this year from a year ago, which would be at the top end of the range of mainstream holiday estimates. Trade group National Retail Federation, for instance, forecast holiday sales to rise 2.3 percent.

It also looks to be shaping up as an encouraging start to the online sphere's holiday season. According to online payment processor PayPal, a division of EBay Inc., payment volume jumped 25 percent on Thanksgiving Day, with more retailers offering their "door-buster" specials to Web shoppers on Thursday.

Retailers "realize that online gives them a jump" on sales, said Amanda Pires, a senior director at PayPal, in an interview. "Every brand name is encouraging people to shop online."

The scene at 4:30 a.m. at a Target store in Modesto, Calif.

Echoing what's been in evidence in physical stores, PayPal has seen more shoppers opening up their wallets for toys, gadgets and "more frivolous" gifts, compared with the more conservative and practical purchases such as winter garb and accessories that predominated last year, she said.

While consumer spending remains uneven and is not back to prerecession levels, various surveys and forecasts have pointed to this holiday season as the potentially best in at least three years.

At Walmart stores, long lines also were reported, with hot sellers such as a 15.6-inch Hewlett-Packard laptop for $298.

At New York's 34th Street and Broadway intersection early Friday, throngs of shoppers were seen toting bags from various stores with locations in the vicinity.

For the second year in a row, 19-year-old Richay Saunders joined millions of wee-hours shoppers around the U.S. in the retail industry's biggest annual marketing and sales extravaganza.

"You get more for less," said the student and Brooklyn native, whose first "doorbuster" trophies included a $100 Barnes & Noble Nook e-reader she bought from Best Buy.

Amar Joshi, who lives in Queens and is originally from India, was out at 3 a.m. visiting stores in both New Jersey and New York after a 10 a.m. start last year taught him that stores can sell out of the hottest items early on Black Friday.

A mere $100 bought Joshi a pair of shoes from J.C. Penney, a belt, gloves and two H&M jackets priced at $20 apiece — one of those jackets alone carried a $100 original retail price.

"We got a great deal," he said, adding that he plans to make an annual tradition of Black Friday shopping.

With consumers still budget-conscious, retailers that depend less on holiday sales than their industry counterparts, such as Home Depot Inc. and Staples Inc. as well as online retailers led by Amazon.com Inc., have participated in Black Friday events as well, seeking to get their fair share of consumers' limited budget.

"Consumer spending surges when shoppers have a reason to spend," said analyst Liz Dunn of FBR Capital Markets. "We believe planned promotions and a value-conscious shopper will drive strong Black Friday sales."

As many as 138 million people are expected to shop between the Friday and Sunday following Thanksgiving Day this year, up from 134 million last year, according to a National Retail Federation survey conducted by BigResearch.

This year, about 49 percent of consumers said they would shop on Black Friday, compared with 37 percent last year, according to a UBS and America's Research Group survey.

By some estimates, Black Friday alone can make up 10 percent or more of a retailer's holiday-season sales. Winning traffic Friday may help stores not only sell beyond what's promoted but also keep the store brand at the forefront of consumers' minds throughout the season, analysts said. About half of the season's sales are expected to be made in the last 10 days before Christmas, analysts said.

"Black Friday is always about traffic," said Farla Efros, a senior vice president at the consulting firm PwC. "It's a good indicator to what the Christmas sales might be. If retailers miss the mark on Black Friday, they are going to move right into Christmas quickly. They are looking at anything to stimulate sales to help offset what their year-end may look like."

So far, the marketing pitches and early specials appeared to get more consumers to buy full-priced items. Sales in the first half of the month have showed "mild to sharp gains," according to MasterCard Advisors' SpendingPulse, which estimates total retail sales across all payment forms, including cards, cash and checks.

At a Staples store in West Lebanon, N.H., more than 100 people, more than last year, braved rain and ice to stand in line before the store's 6 a.m. opening, said Jevin Eagle, the company's executive vice president of marketing and merchandising, in an interview. The store's specials included a Hewlett-Packard laptop for $299.98, discounted from a regular price of $499.98.

Consumers were paying full price for items such as a Kindle e-reader as well, in a positive sign, he said. Overall, retailers across the board said they don't expect this holiday season to be more promotional than last year with most of the special offers more targeted and planned to limit profit and margin erosion.

"People are excited to get a jump on the holiday season," Eagle said. "Our intent is to be very promotional and give a great deal, but we don't expect the season to be more promotional than before."

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