U.S. retailers moved from the frenzied start of the holiday shopping season to the next phase on Saturday, hoping to avoid a drop after Black Friday and keep the momentum going during a fitful economic recovery.
After featuring the usual deep discounts on Thanksgiving on Thursday and on Friday, retailers were still offering bargains on Saturday as holiday spending is expected to show only about half the growth of last year.
The holiday shopping season that traditionally kicks off on Black Friday - the biggest day of the year for retailers - is closely watched by investors as consumer spending accounts for about 70 percent of the U.S. economy.
Initial signs were encouraging. ShopperTrak, which measures retail traffic, estimated that sales rose 6.6 percent on Friday compared with a year earlier.
But in 2010 retailers also got off to a strong start to the holidays, only to see a sharp and quick falloff. The National Retail Federation expects holiday retail sales to rise 2.8 percent this year, down from 5.2 percent growth in 2010.
That means an even tougher battle for market share.
"Everybody is fighting for the same consumer," said Laura Gurski, a partner at management consulting firm A.T. Kearney.
Those consumers included Alison Shartrand, a Boston-based accountant who visited clothing retailer Aeropostale's store on Times Square. "I'm only going to shop if there are deals ... the cheaper the better," she said.
Aeropostale Inc, said on its website everything was 50 to 70 percent off in its "Saturday Blowout." At a Gap Inc store in New York's Times Square, everything at the clothing retailer was 60 percent off on Saturday.
"That's the name of the game now - promote, promote, promote," said David Bassuk, managing director of consultancy AlixPartners LLP. "They've got to keep it coming."
STRIKING THE RIGHT BALANCE
Neighborhood shops - often undercut and overwhelmed by big chain stores and warehouse clubs - showcased their own efforts during "Small Business Saturday" promoted by American Express and others. President Barack Obama was among those shopping at local shops in Washington.
The hunt for bargains turned ugly at some stores on Friday.
One of the most outrageous incidents was at a Walmart store in the Los Angeles area, where up to 20 people were hurt when a woman used pepper spray to get the edge on other shoppers rushing for Xbox game consoles. She turned herself in to police on Saturday.
The tough economy, coupled with smart phones that allow for fast comparison of prices, mean the pressure to offer consumers something special and affordable is intense.
"We have put together an entire promotional program for the whole season so we don't shoot all our bullets on the day after Thanksgiving," Jamie Brooks, senior vice president of retail services for Sears Holdings, told Reuters on Friday.
Deep discounts alone may not be enough.
The Black Friday campaign by department store chain Macy's Inc featured an ad with teen singer Justin Bieber and exclusive products will be a focus of its holiday promotions.
Retailers are also trying to strike the right balance between not having too much inventory that must later be sold at profit-draining discounts and making sure they do not anger customers by running out of popular items.
"The most important thing to our customers is when we see something in an ad and come into the store, we have to have it," said J.C. Penney Co Inc executive Mike Thielmann.
Online shopping soared on both Thanksgiving and Black Friday, suggesting that Cyber Monday - the biggest online shopping day of the year - could be a banner day for retailers with the right mix of discounts, special offers and the now commonplace free shipping.
IBM Smarter Commerce, a software and services company for retailers, said online sales rose 39.3 percent on Thanksgiving and 24.3 percent on Black Friday, with robust growth in searches and sales on mobile phones and tablets.
(Reporting by Phil Wahba in New York and Jessica Wohl in Chicago; Additional reporting by Dhanya Skariachan and Mihir Dalal in New York; Editing by Philip Barbara and John O'Callaghan)