After what appeared to be a strong start to the 2006 holiday shopping season, the question is whether shoppers will have the same zeal for shopping between now and the end of the season when the discounts may not be as steep.
Stores and malls that opened as early as midnight on Thursday drew bigger-than-expected crowds for discounts on such items as flat-screen TVs and toys, and robust sales for the first day of the season offset slower business as the weekend wore on, according to early reports.
The biggest winners appeared to be electronics chains such as Best Buy Co. Inc. and popular-priced department stores including J.C. Penney Co., which pulled in shoppers with good deals. Yet Wal-Mart Stores Inc., which promised the most aggressive discounting ever, was an exception, announcing Saturday that same-store sales for the month would be weaker than expected. Wal-Mart has struggled for months to appeal to both higher-income shoppers and low-price fans.
“The hysteria has come down a bit, but it was a great start,” said Bill Martin, co-founder of ShopperTrak RCT Corp., which tracks total sales at more than 45,000 mall-based retail outlets. But he said the true measure of the season is whether “retailers can sustain the loyalty and excitement” until the end.
Shoppers were clearly looking for as big a discount as possible.
“I started Friday morning at 5 a.m.,” said Kim Neuharth, shopping at the Jordan Creek Town Center in West Des Moines, Iowa. “At Kohl’s and Target, we got good deals. I bought my stepdaughter a dress for the prom for like 50 bucks. It was originally something like $100 at Younkers. It was on sale and I had a coupon for 20 percent off.”
Martin expects that total retail sales for the first weekend of the season will be higher than last year, boosted by Friday’s better-than-expected business. Total sales rose 6 percent to $8.96 billion that day, compared to a year earlier, according to ShopperTrak. The company planned to report Saturday’s results on Monday.
Retailers’ strong performance was a direct result of their aggressive discounting and promotions, designed to get consumers to start shopping early. More stores and malls opened at midnight Friday, and Toys “R” Us Inc. and Sears Holdings Corp.’s Sears stores opened at 5 a.m., an hour earlier than in the past.
Jerry Storch, CEO and chairman of Toys “R” Us, said he was pleased with weekend results, noting that sales were strong across the board. In addition to Mattel Inc.’s Fisher-Price’s T.M.X. Elmo, hot toys include Fisher-Price’s Kids Tough Digital Camera, and some of the toy retailer’s exclusives like VTech Holdings Ltd.’s pink Nitro Notebook, a laptop computer.
Gail Lavielle, spokeswoman at Sears Holdings, which also owns Kmart stores, said Sunday the stores were busy through Friday and Saturday. At Sears, flat-screen TVs, digital cameras and Craftsman tools were the hot items. At Kmart, holiday decor including Christmas trees, jewelry and toys were the most popular.
Meanwhile, online shopping was also strong on Friday. ComScore Networks, which tracks Internet spending, reported Sunday that online sales, excluding travel, auctions and corporate purchases, rose 42 percent to $434 million on the day after Thanksgiving, compared to the same day a year ago. ComScore expects online sales of almost $600 million on Monday, known as “Cyber Monday,” the kickoff to the shopping season for e-tailers. That would be a 24 percent increase from the $484 million in sales raked in on Cyber Monday last year.
Retailers were optimistic but also a little uneasy going into the season, concerned that economic factors like the slowing housing market might make shoppers more conservative. And many shoppers interviewed during the weekend said they were trying to be budget-conscious.
Heather Ackors, 24, who was shopping on Friday at Wal-Mart in the Kansas City area suburb of Roeland Park, Kan., said she planned to spend less this year.
“Less, less is more,” Ackors said. “You’ve go to budget when you have a little kid. You’ve got to be careful. You can’t be spending up all the food budget on toys.”
Still, the discounts accomplished what they were supposed to do for many retailers — get consumers spending early. Penney said in a statement Saturday that the holiday shopping season was “off to a good start.”
Karen MacDonald, spokeswoman at Taubman Centers Inc., which operates or owns 23 malls in 11 states, on Sunday reported “two solid days of post-Thanksgiving business.” According to a sampling of half of Taubman’s malls, business was up in the low to mid-single digits so far this weekend, she said. The most popular items were consumer electronics, cosmetics and toys; the weakest category was home furnishings.
Billie Scott, spokeswoman at Simon Property Group, which owns or operates 175 malls in 38 states, said that business was at least as good as a year ago.
But Wal-Mart had a slow start despite attracting crowds for special offers on flat-screen TVs and other items. The discounter said it expects to report a same-store sales decline of 0.1 percent in November, slightly below its projections for flat sales for the month. The results puzzled analysts as Wal-Mart has stepped up its discounting throughout the month, including offering certain generic drugs for as low as $4 per prescription.
As for Black Friday, C. Britt Beemer, chairman of America’s Research Group, speculated that Wal-Mart customers might have looked only for special offers and so didn’t shop the entire store.
A clearer picture of how retailers’ sales fared over the Thanksgiving weekend will emerge Thursday, when merchants report monthly sales results for November.
“Consumers wanted bargains, and more bargains,” said Beemer. “You have to give the customer what they want at the price they want to pay or else you will lose them.”
Nicole Machica, who was at the Del Amo Fashion Center in Torrance, Calif., had already spent a third of her projected $200 gift budget by Saturday afternoon, mostly on bargains. Her gifts included Barbies and a pair of pajama pants for her boyfriend “because they were on sale for $7.”