Holiday sales begin before turkey grows cold

By Michele Gershberg and Aarthi Sivaraman

NEW YORK (Reuters) - Thanksgiving Day means leisurely time with family for many Americans, but this year the slow economy has prompted some U.S. retailers to open on Thursday, a day ahead of the traditional start of the holiday shopping season.

The holiday weekend will test the strength of consumer sentiment, a main driver of the U.S. economy, as the country faces its worst financial crisis since the Great Depression.

Sales on "Black Friday", the day after Thanksgiving, once allowed some stores to move into the black for the year. The holiday shopping season runs through year end, with the lion's share of sales occurring up to Christmas Day on December 25.

But this year, stores from discounter Kmart to clothing chain Old Navy opened on Thanksgiving Day, hoping to capture business before the traditional roast turkey meal grows cold.

"It makes a lot of difference where you can save even $5," said Emily Ramsawak, a babysitter shopping at a Kmart in Manhattan with dozens of others. "My friends and I, we look for discounts. It helps a lot with the economy being so tough."

Retailers fear the shrinking economy and mounting job losses could cost them billions of dollars during the crucial season that brings in up to 40 percent of annual sales. Many started offering steep discounts on everything from clothes to electronics weeks in advance of Thanksgiving.

Tyra Reid said a shopping trip before sitting down to a holiday dinner was worth the trouble. Later, she planned to visit a shopping mall ahead of a midnight store opening.

"I got an excellent deal," she said of a half-price version of the video game Guitar Hero. "We'll get a good meal later."

Other retailers, from Wal-Mart Stores Inc to Best Buy were due to start their big sales in the early hours of Friday.

"Consumer spending on gifts for the holiday season is going to be down considerably," said Eric Anderson, professor of marketing at the Kellogg School of Management, Northwestern University in Illinois. "Black Friday will be the first indicator of how bad it's going to be."

THE WORST SEASON?

Experts predict this could be the worst sales season since the early 1990s as Americans hit by a housing slump and credit crunch make do with fewer holiday gifts.

Analysts polled by Thomson Reuters data have forecast that retail sales at stores open at least a year could fall 2.2 percent for November compared with 4 percent growth last year.

Excluding expectations for growth at discounter Wal-Mart, the expected decline is a more precipitous 6.6 percent.

Many retailers, from department stores like Macy's to specialty chains such as AnnTaylor Stores, are battling to retain loyal customers and eke out a profit as rivals cut prices up to 40 and 50 percent. Some are willing to sacrifice profit rather than risk losing clients for good.