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Retailers ready as Black Friday dawns

The deals are plentiful but inventories are low as cautious merchants seek to persuade wary shoppers to buy again.

November 27, 2009|By Andrea Chang
  • Midnight bargain hunters descend on Citadel Outlets. "Black Friday is critical for the whole economy to get a feel for where the consumer is headed," says one expert.
Midnight bargain hunters descend on Citadel Outlets. "Black Friday… (Axel Koester, For The Times )

Retailers are doing whatever it takes to lure shoppers to the malls today.

Desperate to avoid a repeat of last year's disastrous holiday season, stores are offering freebies, slashing prices and using social media to promote their deals. With hopes pinned on the day after Thanksgiving, the traditional kickoff to the Christmas season, many planned to open well before dawn.

"Black Friday will be a very key day for us," said Mike Taxter, an executive vice president at J.C. Penney Co. and director of JCPenney stores, which are offering 15% more specials than last year. "If you're going to run the race, you want to start that first day off really strong."

But worries remain that amid continued consumer stinginess, the crucial holiday season won't be that much better than last year's, when sales during the November-December period were the worst in more than 40 years.

Spending patterns on Black Friday could have far-reaching implications for the battered economy: Strong sales could kick-start the recovery after months of uncertainty. A sluggish season could mean more weakness beyond Christmas.

"Black Friday is critical for the whole economy to get a feel for where the consumer is headed," said Marshal Cohen, chief industry analyst at market research firm NPD Group. "If the consumer doesn't engage in spending, the economy is going to continue to lag. The recovery is just going to be prolonged."

Another drag on the day's receipts could come from retailers themselves. Burned last year, merchants anticipated a weak holiday season and have scaled back inventory levels an average of 12% to 18% this year, Cohen said.

"I can think of a couple of instances already at J.Crew and at the Gap where some of the popular items are gone," said John Morris, a retail analyst at BMO Capital Markets. "It's going to be the first time in a long time that you're going to see some of the players sell out of product before they even get to Black Friday."

Up to 134 million people are expected to shop today or over the weekend, 4.7% more than the 128 million people who planned to do so last year, the National Retail Federation said this week.

But with the nation's unemployment rate in the double digits, will people spend freely or merely window shop?

For Yheisi Alfaro, 27, how much she'll spend on Black Friday depends on how good the bargains are. The clerical worker from West Los Angeles planned to go with friends to Camarillo Premium Outlets but said she was shopping for discounted items only.

"I won't buy unless it's a really good deal," she said. "If it's less than 50% off, I won't be interested."

Still, many industry watchers are expecting huge shopper turnout fueled by pent-up demand.

With merchants promising bigger and better deals and warning customers that low inventory could cause hot items to sell out, they're hoping to attract not just loyal Black Friday shoppers but also those like Christina Clark, a high school teacher from Santa Monica who has resisted shopping on the day after Thanksgiving for years.

"I kept saying, 'It's not worth it,' " said Clark, 40. "But now, because things are going to be limited and because there's going to be more deals than ever before, this year I'll brave the crowds."

Black Friday marks the single largest sales day of the year for many retailers. Many, such as JCPenney, Gap and Sears, have boosted not only their traditional promotional efforts, but have also taken to social media sites such as Facebook and Twitter to tout their specials.

One of the season's most aggressive chains, Toys R Us Inc., planned to open all of its namesake U.S. stores at midnight Thursday for the first time, give away a box of Crayola crayons with every purchase and offer more than 120 door-busters and bonus "mystery deals."

"The rest of the year is preseason for us," said Jerry Storch, chief executive of the toy giant. "We are far more excited than we are worried."

But industry analysts say there is still plenty to be worried about. Many are predicting that the holiday season will be relatively flat at best; if sales are much worse than expected, that could spell trouble for a strong turnaround because consumer spending accounts for about 70% of all U.S. economic activity.

Retailers will face stiff competition from bricks-and-mortar rivals and online sellers such as Cutthroat price wars have already broken out among some retailers over popular gifts such as toys, electronics and books.

Another problem is that many of the season's hottest items are all relatively inexpensive -- such as girls' sequined tops, accessories, dolls and $10 Zhu Zhu robotic hamster pets -- further underscoring consumers' preference this year for affordable holiday gifts.

"We're calling it the cheap-thrill Christmas," Morris said.

Even with all the available deals, it still wasn't enough to persuade Nicole Tellem, an attorney from Playa Vista, to shop today.

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