Shopping Season Off to Strong, But Uncertain Start

The nation's stores were crowded on the day after Thanksgiving, but it's still too early to say whether the 2003 holiday shopping season will be a boom or a bust.

Shoppers lined up early Friday to take advantage of stores offering early-bird specials and other incentives. According to retail consulting firm ShopperTrak, sales on Black Friday totaled $7.2 billion, up 4.8 percent from the same day in 2002, while Saturday added $5.2 billion to the tally. Sales for the rest of the three-day Thanksgiving weekend appeared to have slowed, but malls still reported decent crowds.

The National Retail Federation —which represents more than 1.4 million retailers — is forecasting overall sales growth of 5.7 percent this holiday season. Sales grow each year, but last year's growth was a meager 2.2 percent. So while this year's Black Friday showing was strong, consider this — Black Friday 2002 also racked up strong sales and the 2002 shopping season ended up being the worst in decades.

While Black Friday is traditionally seen as the start of the holiday shopping season, retailers actually define the "holiday shopping season" as the full months of November and December. And those two months are important, accounting for 25 percent to 40 percent of annual sales for some stores.

Cautious Outlook

Retailers had a great summer. Consumers armed with child tax credit checks hit the stores running in August and the beginning of September, but sales have pulled back since then. While the industry is optimistic this holiday season will be stronger than in 2002, many retailers are being more cautious in their own forecasts.

Wal-Mart, the nation's biggest retailer, had a strong Black Friday, seeing sales up about 6 percent from last year. The retail giant, which accounts for 7 percent of total sales nationwide, is forecasting a modest 3-5 percent increase in overall sales for the rest of the year. Target Corporation warns it could miss sales targets because of slumping sales at its Marshall Field's and Mervyn's department stores. Federated — parent company to Macy's and Bloomingdales — expects sales to be flat.

On the flip-side, Best Buy is expecting better sales this year because of the economic upswing. The consumer electronics chain is using exclusive offers, such as new DVDs from the Rolling Stones and the Eagles, to entice customers into its stores.

Fewer Discounts

The year 2002 was the year of the discount. This year will be different. Last year at this time, shoppers were already enjoying storewide discounts of 20 percent to 40 percent, as retailers tried to jump-start weak consumer spending. This year, retailers are being more selective with their discounts, still using them as bait to lure in customers, but not offering them on the majority of items.

Retailers have the advantage. They're expecting shoppers to spend more because of the improving economy. They're also carrying less stock in order to avoid the huge mark-downs on unsold merchandise they were forced to offer last year during the week before Christmas.

In 2002, according to the International Council of Shopping Centers, 41 percent of shoppers waited for those deep discounts — in some cases as much as 80 percent off — and did their buying in that final week before Christmas.