Holiday shoppers are spending

Research firm says Black Friday sales up 3%, thanks to deep discounts, in cautious start to the season.

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By Parija B. Kavilanz, senior writer

Shoppers rush to grab hot deals on electronics like flatpanel TVs and Blu-Ray players at Wal-Mart.
Discount hunters hit a J.C. Penney store at 4 a.m. Friday at the Columbia Mall in Grand Forks, N.D.
The Nike outlet in Woodburn Company Stores in Woodburn, Ore., opened its doors to shoppers on Thanksgiving Day.

NEW YORK ( -- Holiday shoppers continued their trek to malls and big-box stores Saturday, amid early indications of slightly higher Black Friday sales to kick off the season.

The nation's retailers were watching anxiously, having already suffered significant declines this year thanks to the weakening U.S. economy.

But the first nationwide returns were positive for merchants.

ShopperTrak RCT, a retail industry research firm, said total Black Friday sales rose 3% this year, to about $10.6 billion nationwide.

Bill Martin, the firm's co-founder, said that given the headwinds facing the nation's merchants - a troubled economy, the traditional weakness in a presidential election year and the aftermath of the summer's record gas prices - the first day was pretty positive.

"Under these circumstances, to start off the season in this fashion is truly amazing and is a testament to the resiliency of the American consumer, and undeniably proves a willingness to spend," Martin said in a statement.

He credited deep discounting for a lot of the sales increases, which were fairly consistent across the nation - up 3.4% in the South, 3% in the Midwest, 2.7% in the West and 2.6% in the Northeast.

"While this is an encouraging start for retailers, there's no guarantee these deep discounts will continue after Black Friday weekend, which could slow spending," said Martin. "Additionally, consumers have just 27 days to shop this year as opposed to 32 in 2007, which may catch some procrastinating consumers off guard, leading to lower sales levels."

Scenes from Black Friday 2008

Taubman Centers, which operates 24 shopping centers in 11 states, said transactions at its facilities were slightly higher than last year on average.

Among Taubman's facilities are the Beverly Center in Los Angeles, Woodfield Mall outside Chicago, and the Stamford Town Center in Connecticut.

Taubman said electronics, apparel and moderately priced jewelry appeared to be the big sellers at its stores, with several malls specifically reporting demand for women's Ugg boots.

Jittery analysts

Going into the holiday weekend, analysts were not optimistic, even with the Black Friday crowds.

"Shoppers definitely have a mission this year," said Marshal Cohen, chief retail analyst for NPD Group. "They are serious about finding the best deals. They are very budget conscious, they've done their research and then they'll go home."

Cohen projects a 3% drop, his first-ever decline forecast, in total holiday sales. Another analyst, America's Research Group chairman Britt Beemer, estimates sales for November and December combined will slip 1%.

"[Shoppers] know exactly what they want, where to shop for it and who has the best deals," said Beemer, who doesn't expect people will deviate from their shopping lists.

That's a problem for merchants who depend just as much on the impulse buy as they do on consumers' shopping lists to get them off to a flying start during the Thanksgiving weekend.

Department store operator J.C. Penney said Saturday it will not issue any Black Friday or full weekend sales results, waiting instead until it puts out its November sales report on Thursday.

"In light of the challenging and volatile economic climate, and shifts in this year's retail calendar, we don't believe that reporting sales data for any one day (or weekend), including Black Friday, would provide a meaningful barometer of our business," the company said in a statement.

An issue of violence

The season got off to a tragic start with fatal incidents in New York and California.

Police said that a 34 year-old temporary employee was trampled to death at the opening of a Wal-Mart store in Valley Stream, N.Y. They said thousands broke through the doors of the store, knocking over as many as a dozen people in the rush for some of the highly touted bargains at the discounter.

"Our thoughts and prayers go out to the families of those impacted," Hank Mullany, Wal-Mart's president for the Northeast, said in a statement. He said the company is cooperating with a police investigation into the incident.

In Palm Desert, Calif., police said two men were shot to death at a Toys R Us store.

"Our understanding is that this act seems to have been the result of a personal dispute between the individuals involved," said Toys R Us spokeswoman Kathleen Waugh, in a written statement. (more on Black Friday violence)

NPD's Cohen said the two incidents would have little impact on shopping.

"Both incidents are terrible and could have a bit of residual effect, where some more people might migrate their holiday shopping online," he said. "But even if it affects 4% of holiday shoppers [this year] that's still an aggressive estimate."

Early start

Stores opened early on Black Friday - in fact, some were even open on Thanksgiving itself - as retailers tried to ignite the holiday shopping period, which can account for as much as 50% or more of sellers' annual profits and sales. The day is dubbed "Black Friday" because of its importance in determining a store's profitability for the year.

Most merchants have had an extremely difficult sales year as Americans seriously retrenched on their shopping habits in light of a worsening economy.

What's more, a record slump in consumer spending has already forced leading store chains such as Circuit City and Sharper Image into bankruptcy. Given this scenario, the National Retail Federation (NRF) forecast holiday sales to rise just 2.2% this year, which would make it the weakest sales gain in six years.

Still, lines snaked around the block at Toys R Us' flagship store in New York's Times Square before its 5 a.m. open on Black Friday.

"I didn't think it would be this [crowded], with the economy the way it was, but I guess Toys 'R' Us was offering the best deals, so this is where everyone came," said shopper Nicole Williams, 29, of New York City at the toy merchant's flagship store in Times Square.

Cold shoppers seek hot toy deals

Gerald Storch, CEO of Toys R Us, said people were in line at 9 p.m. Thursday outside the Times Square store.

"I am excited and optimistic about today and the rest of the holiday season," Storch said.

One interesting trend, Storch pointed out, was that shoppers weren't necessarily buying lower-priced toys. Storch said some of the fastest-selling toys in the first hour after the store opened were the $60 Elmo Live and the $139.99 Spike the Ultra Dinosaur from Fisher-Price.

"I'm not that surprised that parents are spending money on their kids, and they want to buy a good, quality toy," he said. "Parents tell us that they will cut back on themselves, but not on Christmas gifts for their kids."

"Given the current economic environment, [the company] understands the issues facing our customers, and we are committed to offering the season's most affordable gifts," said Ken Hicks, president and chief merchandising officer for J.C. Penney.

However, retail analysts say merchants have to keep the shopping momentum over the weekend.

This will be a real challenge. While consumers are cutting back on how much they spend on gifts, the NRF estimates that Black Friday and the Thanksgiving weekend will also likely see fewer Americans hitting stores.

The trade group said about 128 million people will commence their gift buying this Friday, Saturday or Sunday after Thanksgiving, down from 135 million last year.

Beemer was unconvinced that retailers will see a decent start to the holiday season. "It will be a disappointment," he said.

-- CNN's Christina Cinnici, and staff writer Catherine Clifford contributed to this report To top of page

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