Big holiday deals unwrapped early

Wal-Mart's early price-cutting has ignited a wave of deep discounts that could rival Black Friday's blockbuster deals.

By Parija B. Kavilanz, senior writer

NEW YORK ( -- Anxious retailers are already clamoring to outdo each other with bigger and better Black Friday-like deals, threatening to make Black Friday itself a non-event this year.

"Black Friday this year may show some signs of vulnerability if retailers keep promoting to the extent that they already are," said Marshal Cohen, chief retail industry analyst with market research firm NPD Group.

J.C. Penney touting its "Biggest sale of them all!" this week.

Wal-Mart (Charts, Fortune 500), the world's largest retailer, isn't waiting to jumpstart its holiday sales.

Wal-Mart already treated its shoppers to an appetizer of its holiday blockbuster deals this past weekend, which included a 14-inch Acer LCD-screen laptop for $348 and a Sanyo 50-inch plasma HDTV for $998.

Typically, these are the kinds of deals that Wal-Mart has used in the past to entice shoppers to its stores at the crack of dawn on Black Friday, the day after Thanksgiving which marks the start of holiday shopping.

"Like they say, you have to be careful what you wish for," said Cohen. "You want consumers to shop earlier but you also want them to keep shopping through the holidays. If consumers do most of their shopping now then Black Friday may not be as robust this year."

Other merchants are following Wal-Mart's lead.

Toys "R" Us shipped its annual holiday discount catalog late last month. Wal-Mart's rival Target (Charts, Fortune 500) rolled out it's holiday ad insert this past weekend.

Department store chain J.C. Penney (Charts, Fortune 500) currently is touting "The biggest sales of them all!" at its stores, offering its shoppers 20 to 60 percent off on clothes and home-related goods.

Also this week, Penney's rival Kohl's (Charts, Fortune 500) has cut prices by as much as 40 percent on sweaters, 50 percent on footwear and 60 percent on jewelry.

Among specialty sellers, both American Eagle Outfitters and Aeropostale (Charts) set 50 to 60 percent discounts on jeans and sweatshirts.

Even some high-end names are chopping prices early. Saks is offering between 30 to 40 percent off online purchases this week.

"All these early discounts say a lot about the general state of retailing today," said George Whalin, CEO of Retail Management Consultants. "Retailers will be very aggressive for the holidays. This is probably the earliest that we're seeing the price wars."

With consumers expected to be more price-focused this year, analysts say retailers know they have to discount generously to win crucial holiday sales.

The National Retail Federation expects total holiday sales this year will grow 4 percent, softer than last year's 4.6 percent increase. The trade group blames the housing downturn and tighter credit market conditions for the shortfall.

With the economy slowing and consumer spending sagging, "we'll see a lot of retailers discounting earlier. They're not going to play the game of waiting to see if someone else cuts prices first," says Stevan Buxbaum, a retailing expert and executive vice president of consulting form Buxbaum Group.

Meanwhile, Mother Nature continues to challenge retailers. Warmer weather in October hurt sales of winter apparel and other cold-weather purchases. This has also forced merchants to cut prices in order to clear Fall merchandise and make room for their new holiday inventory.

Said Buxbaum, "Merchants are looking at holiday retailing as a zero sum game. If retailers grab consumers' dollars sooner in the season then it's fewer dollars that these consumers have to spend somewhere else."

But Buxbaum is confident that retailers won't run out of discounts before Black Friday.

"Retailers will have to keep coming up with more deals because shoppers have been trained to believe that stores always save the best deals for later in the season. It's a difficult mindset to break," Buxbaum said. Top of page