Nov 28, 2008

World - US;Shoppers arrive early for US holiday sales

Michele Gershberg and Aarthi Sivaraman

NEW YORK (Reuters) - Early bird shoppers filed into U.S. stores on Thanksgiving day on Thursday, drawn by bargains from retailers who hope to salvage what could be a disastrous holiday sales season.

The holiday weekend will test the strength of consumer sentiment, a main driver of the U.S. economy, as the country faces its worst financial crisis since the Great Depression.

While most stores start sales on "Black Friday", the day after Thanksgiving, several opened their doors on Thursday, aiming to capture business even before consumers started their traditional holiday meal with family or friends.

"It makes a lot of difference where you can save even $5," said Emily Ramsawak, a babysitter shopping at a Kmart in Manhattan with dozens of others. "My friends and I, we look for discounts. It helps a lot with the economy being so tough."

The holiday shopping season runs through year end, with the lion's share of sales made by Christmas Day on December 25.

Retailers fear the shrinking economy and mounting job losses could cost them billions of dollars during the crucial season that brings in up to 40 percent of annual sales. Many started offering steep discounts on everything from clothes to electronics weeks in advance of Thanksgiving.

Tyra Reid said a shopping trip before sitting down to a holiday dinner was worth the trouble. Later, she planned to visit a shopping mall ahead of a midnight store opening.

"I got an excellent deal," she said of a half-price version of the video game Guitar Hero. "We'll get a good meal later."

Scores of shoppers were busy hunting for deals at Kmart, owned by Sears Holdings, as well as Gap Inc's Old Navy in New York on Thursday, along with toy stalwart FAO Schwarz. Other stores that opened for business included video rental chain Blockbuster, which is selling electronics like video games and Blu-ray players.

Other retailers, from Wal-Mart Stores Inc to Macy's and Best Buy, were due to start their big sales in the early hours of Friday.

"Consumer spending on gifts for the holiday season is going to be down considerably," said Eric Anderson, professor of marketing at the Kellogg School of Management, Northwestern University in Illinois. "Black Friday will be the first indicator of how bad it's going to be."


Experts predict this could be the worst sales season since the early 1990s as Americans hit by a housing slump and credit crunch make do with fewer holiday gifts.

Tourists, who have helped buoy sales at major U.S. stores, are also pulling back as the dollar strengthens and a global financial crisis affects economies overseas.

"It's almost like a guilty feeling when I hand over my money," said Janet Duran, who was visiting from Scotland. "I think: Should I be doing it?"

Retail sales at U.S. stores open at least a year could fall 2.2 percent for November compared with 4 percent growth last year, based on analyst forecasts compiled by Thomson Reuters.

Excluding expectations for growth at discounter Wal-Mart, the anticipated decline is a more precipitous 6.6 percent.

Many retailers, from department stores like Macy's to specialty chains such as AnnTaylor Stores, are battling to retain loyal customers and eke out a profit as rivals cut prices up to 40 and 50 percent. Some are willing to sacrifice margins rather than risk losing clients for good.

"It's the retailers in the middle who are trying to avoid losing customers," said Anderson. "Macy's is worried about customers, who have never spent a lot of money at Wal-Mart, trying out Wal-Mart and liking it."


After a sharp sales decline for most of November, retailers hope shoppers have been waiting to open their purse strings when the Thanksgiving weekend brings better deals.

Nearly 45 percent of consumers plan to shop during the Black Friday weekend, according to a survey by the International Council of Shopping Centers. More than 80 percent of those shoppers expect to visit a discount store, while 78 percent said they would head to a department store.

Some consumers said they were putting a different emphasis on celebrating the holidays, focusing on time spent with family and friends rather than standing in line outside stores to purchase the latest hot toy or gadget on the cheap.

"I will not go near stores on Black Friday. People are crazy," said Lori Kirby, who was in Kmart to pick out a last-minute holiday outfit for her aunt. "Unless you get there first, it's like running with the bulls or something."

"I'll try to spend less," she said. "People go crazy buying and spending, but that's not what the holidays are about."

Some have chosen to save money by crafting presents by hand or swapping goods gathering dust in the attic.

Others have the option of buying goods at firesale prices, after U.S. chains like Circuit City and Mervyns declared bankruptcy ahead of the holiday.

(Reporting by Michele Gershberg and Aarthi Sivaraman; Editing by Marguerita Choy)

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