Deep Discounts Draw Shoppers

Sales in the nation’s stores were strong over the weekend, to the relief of retailers that had been expecting a holiday shopping period as slow as the overall economy.

But while spending was up, there were troubling signs in the early numbers. The bargains that drove shoppers to stores were so stunning, analysts said that retailers — already suffering from double-digit sales declines the last two months — would probably see their profits erode even further. Also, after shoppers flooded stores on Friday, foot traffic trailed off significantly on Saturday and Sunday.

Retailing professionals consider the weekend after Thanksgiving a barometer of overall holiday sales, which account for 25 to 40 percent of their annual sales. And in a year marked by an economic crisis, they are desperate for any signs that consumers are still willing to spend.
Their first glimpse came from two industry surveys released on Sunday. ShopperTrak, which does research for retailers, said sales increased 3 percent on Friday, compared with last year.
The National Retail Federation, adding up sales Thursday through Saturday and projected sales for Sunday, said that each shopper spent about 7 percent more this year than last year. Shoppers spent an average of $372.57 Friday though Sunday, according to the federation, a trade group.

“It seems that not only did retailers do a good job of attracting shoppers but it seems that shoppers were also excited again to take part in the tradition of Black Friday weekend,” said Kathy Grannis, a spokeswoman for the federation.
That study also showed that Friday was by far the busiest day of the weekend, with traffic trailing off by more than 16 million people on Saturday.
Analysts said the discounts that drew in shoppers over the weekend were so steep that many ailing chains might be no better off in the long run.
“You’re looking at discounts of 50 to 70 percent off,” said Matthew Katz, managing director in the retail practice of Alix Partners, an advisory and restructuring firm. “You have to sell two to three times as much to break even.”

Chains as varied as Target and Neiman Marcus offered goods at some of their lowest prices ever. At Target, a 26-inch LCD HD-TV, originally $429.99, was selling for $299. Last week Tracy Mullin, president and chief executive of the National Retail Federation, noted that “this could be the most heavily promotional Black Friday in history.”