Holiday buying surges, slows

Shoppers pulled back after robust Black Friday, according to preliminary retail figures

December 01, 2008|By Andrea K. Walker | Andrea K. Walker,andrea.walker@baltsun.com

Shoppers taking advantage of steep discounts and door-buster deals spent more than expected the day after Thanksgiving, providing retailers with a surprisingly strong start to the holiday season.

But spending slowed as the weekend progressed, according to early surveys. And retail experts questioned whether stores would be able to keep up the momentum in a year when consumers say they are cutting their holiday budgets amid an ailing economy. By most estimates, this holiday shopping season is expected to be the worst in years.

Shoppers in Maryland and across the country spent $41 billion this weekend, or an average of $372.57 a person - a 7.2 percent increase from $347.55 last year, according to figures released yesterday by the National Retail Federation, an industry trade group.

"We'll have to see if this affects the whole holiday season," said Ted Vaughn, a partner in the consumer products industry group at BDO Seidman. "It's a good start, but not necessarily an indication of what will happen the rest of the season."

Shopper Trina Lowe, 41, who lives in Salisbury and works for a school system, said she plans to spend about the same this year on holiday gifts. She hit several shopping sites this weekend including The Mall in Columbia, Dick's Sporting Goods, Target, Wal-Mart and Toys "R" Us.

"It's Christmas," said Lowe, who has two teenagers. "We try to get them the more expensive things that they want."

But Jenn Tawney, a 28-year-old from Perry Hall who works in advertising sales, said she is definitely watching her spending. Companies are buying less advertising, so her business is down. And her investments in the stock market have taken a hit as well.

Tawney described this year's holiday shopping as more of a challenge than in previous years.

"I'm more on a budget than ever before," she said. "I'm more picky. I think, 'Is it really worth it?' I'm spending less on everyone but trying to make it seem like we're not spending less on everyone. It's a real challenge."

Chicago-based tracking firm ShopperTrak RCT said sales increased 3 percent on Black Friday, the nickname for the day after Thanksgiving because it was long responsible for putting merchants' ledgers in the black. This year's growth was down from the more than 8 percent increase recorded in 2007. The group will release its full weekend figures later this week.

"What we heard going into the season was that everything was down, way down," said Aaron Martin, a ShopperTrak spokesman. "So I think [Black Friday] was kind of a welcome surprise for retailers."

A BDO survey of 100 chief marketing officers at major retailers conducted before Black Friday predicted sales would increase 1.2 percent this year. Vaughn said yesterday that sales came in at a higher 2.8 percent to 3 percent increase Friday.

Online sales rose 2 percent on Thanksgiving Day and Black Friday, according to preliminary figures released by comScore Inc. But the group said online holiday spending so far this year has declined 4 percent from 2007.

Retailers discounted heavily for the weekend, with some such as J.C. Penney offering their best Black Friday bargains in history. Shoppers responded by crowding stores that opened as early as midnight.

But the bargains retailers offered Thanksgiving weekend aren't expected to be as steep in coming weeks, leaving some to wonder if retailers will be able to pull as many consumers into their stores.

Traffic had already started to decline as the weekend progressed. About 73.6 million people shopped Friday, while 56.9 million shopped Saturday and just 26.2 million were expected to shop yesterday, according to NRF.

Shoppers have said they don't plan to spend as much this holiday season as rising food and utility bills and falling housing values and stock portfolios have put pressures on their household budgets. Major retailers reported weak October sales, and many said they expected similar results through the end of the year.

NRF expects the holiday season, when most retailers ring up the bulk of their sales, will be the worst since 2002, with business increasing just 2.2 percent, well below the 10-year average increase of 4.4 percent. Others predict that sales could decline for the season.

Thanksgiving weekend isn't necessarily the biggest shopping span of the season anymore, but it can set the tone for the season.

"This year it was absolutely crucial to get off to a good start in order to give the industry a little breathing room," said Scott Krugman, an NRF spokesman.

America's Research Group, which tracks consumer spending, found that fewer people shopped after the early-bird specials Friday. The company's 14 researchers that scoured seven to 11 stores each also found that people were carrying fewer bags than last year. There was less impulse buying, said Britt Beemer, the company's founder.

"People went in with their list and stuck with it," said Beemer, whose group will release sales results for the entire weekend later this week.

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