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Retailers see strong start to holiday season

Economists say shoppers need to keep buying

Posted: Monday, November 26, 2007

NEW YORK - The nation's shoppers set aside worries about higher gas prices and a slumping housing market and proved their resilience over the Thanksgiving weekend, giving what the nation's merchants wished for - a strong start to the holiday shopping season.

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Stores and malls opened the season as early as midnight, drawing bigger-than-expected crowds Friday for discounted flat-panel TVs, digital cameras and toys such as all things related to Disney Channel's "Hannah Montana." Strong sales continued through Saturday, according to one research group that tracks total sales at retail outlets across the country.

Clearly, the biggest draw was electronics, benefiting consumer electronics chains like Best Buy Co. and discounters such as Wal-Mart Stores Inc. and Target Corp. Popular-priced department stores including J.C. Penney Co. and Kohl's Corp. drew in crowds with good deals. Toy stores like Toys "R" Us Inc. fared well too. Still, apparel sales appeared to be mixed at mall-based clothing stores, though a cold weather snap helped spur sales of outerwear and other winter-related items.

"This was a really good start. ... There seemed to be a lot of pent-up demand," said Bill Martin, co-founder of ShopperTrak RCT Corp., which tracks total sales at more than 50,000 retail outlets. ShopperTrak reported late Sunday that sales on Friday and Saturday combined rose 7.2 percent to $16.4 billion from the same two-day period a year ago.

Total sales on Friday, the day after Thanksgiving, rose to $10.3 billion, up 8.3 percent from the same day a year ago. Martin had expected increases no greater than 5 percent.

Meanwhile, Internet research firm comScore Inc. reported a 22 percent gain in online sales on the day after Thanksgiving compared with the same day a year ago and estimated online sales would exceed $700 million online today, the official kickoff to the online shopping season.

The signs were encouraging, but stores are now wondering whether bargain hunters will keep up the pace as they face an escalating credit crunch, depreciating home values and rising daily living expenses.

Frederick Crawford, managing director at AlixPartners, a turnaround consulting company, said that amid economic challenges, people are buying fewer gifts.

"Clearly, it was mission-based shopping," Crawford said. "People had their list, and they were very specific in what they were looking for."

The nation's stores worked hard to lure shoppers with expanded hours, including midnight openings, and a blitz of early morning specials Friday.

Many stores were also more focused on discounting products that they knew shoppers wanted. Gail Lavielle, a spokeswoman at Sears Holding Corp., which operates Kmart and Sears stores, said it zeroed in on great deals on electronics, instead of offering deep discounts on a wide range of products. Still, analysts say frustrations were high among shoppers who couldn't get their hands on limited deals at many different stores.

Lavielle noted that the turnout Friday was better than a year ago, and customer flow was steady throughout the weekend. Both Kmart and Sears sold out a significant inventory of its flat-panel TVs. Other hot items were Global Positioning System receivers, game consoles like the hard-to-find Nintendo Wii, and digital cameras.



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