Shoppers go for broke

Financial worries aside, bargain hunters stormed local stores at the start of the holiday shopping season

November 24, 2007|By Jamie Smith Hopkins, Hanah Cho and Allison Connolly | Jamie Smith Hopkins, Hanah Cho and Allison Connolly,Sun reporters

Defying gloomy predictions of poor turnout, shoppers responded yesterday to retailers' aggressively advertised sales by packing a variety of Baltimore-area stores for the traditional kickoff to holiday buying.

Passionate shoppers began lining up during pre-dawn hours to secure bargains on televisions, laptops and other merchandise. Electronic stores appeared to draw the biggest crowds in the Baltimore area and around the country.

"I go overboard every year," said Linda Becker of Freeland, who does 70 percent of her holiday buying on Black Friday and who lined up before doors opened at Best Buy in Lutherville.

Though retailers and mall operators were upbeat about the crowds yesterday, economists warned that Americans are so financially pinched that the season as a whole is likely to be mediocre at best - and possibly one of the worst in years. Pummeled by rising costs for everyday necessities, some shoppers said yesterday that they plan to economize on gifts this year.

"I don't see people buying much," said Felicia Charnock of Hughesville while taking a breather on a bench at The Mall in Columbia yesterday. "I'm spending less, because my fuel bill doubled and my electricity bill did, too."

"You see a lot of people looking - not buying," added Charnock's daughter, Donna Pettersen of Berwyn Heights.

The National Retail Federation predicts that sales this month and next will rise 4 percent, the smallest growth since 2002, when the country was in the aftermath of the last recession. Though concerns about holiday spending are as perennial as poinsettias, this year has retailers especially worried because the reasons to scrimp and save have piled up.

Americans have little in the way of extra money, because on average they spent more than they earned in 2005 and 2006, and - with the housing market in a slump - they are unlikely to use their home equity as a piggybank. Worse, interest rates on many adjustable mortgages are rising, and a growing number of people are losing their homes to foreclosure.

On top of that, gas prices are about $3 a gallon and home heating costs are spiking.

Howard L. Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking firm in New York, pointed to all these problems as he noted that scores of retailers had disappointing performances last month.

The pain cuts across the sector - from Wal-Mart, which had flat same-store sales in October, to Macy's, where sales dropped 1.5 percent. Nordstrom, whose more affluent shoppers have helped it weather past retail declines, reported that sales were down 2.4 percent last month.

Davidowitz said many retailers in "sheer desperation" began offering discounts two weeks ago that they would usually wait to unveil the day after Thanksgiving. Called Black Friday, it's one of the busiest shopping days of the year. It earned the nickname because retailers have historically said they record their first profits of the year that day.

Davidowitz said he believes tough times are just beginning, and expects even worse retail sales in 2008. But already "it's pretty ugly," he said.

"November might be a little better, but the whole holiday is going to be terrible," he said.

Said Ayuna Kidder, an economist with TNS Retail Forward, a retail management consulting firm in Columbus, Ohio: "It is the most difficult out there for low-income consumers, and it's getting more difficult for middle-income consumers as well."

Retailers in the Baltimore metro area, which includes affluent suburbs, said they think they have reason to be optimistic. The Best Buy store in Lutherville, which opened at 5 a.m., was a madhouse for at least the first hour as shoppers stormed the aisles for Sony laptops on sale for $399.99, DVDs for a couple of bucks and other items at "doorbuster" prices.

"We train for this all year," said Anthony Rosselli, customer experience manager at the store, who stood on a table to rally employees just before the doors opened.

Officials of three area malls - Towson Town Center, White Marsh Mall and The Mall in Columbia - said at about lunchtime yesterday that the morning foot traffic was as good as, or better than, it was on Black Friday last year.

The malls, owned by Chicago-based General Growth Properties, tried to drum up early-morning interest by handing out goodies to the first 500 people in the door. (The malls opened at 6 a.m.) Customers got coupons, gift certificates and - in a few cases - Nintendo Wii video game systems.

"I've seen more bags today in the morning than I saw last year," said Karen M. Geary, senior general manager at the Columbia mall, who said she thinks the Baltimore-Washington area is more cushioned than most from economic turbulence. "All of our electronics stores had waits."

By midmorning, the mall's bustle resembled a typical Saturday evening crowd. The parking lot was packed, and tired shoppers filled nearly every seat in the food court. But inside the stores, most of the cash register lines were short.

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