The holiday shopping season is in full swing on Thursday, with retailers hoping consumers will spend big despite worries about the fragile economy and their own precarious finances.
The shopping period has been underway for some time as retailers such as Wal-Mart Stores Inc and Toys R Us started early by offering layaway programs.
But shoppers are looking for major bargains and retail executives are predicting a more competitive season than 2010.
An Old Navy store in Watchung, New Jersey, was teeming with shoppers on Thursday morning, while a line outside a Best Buy in Union, N.J., included shoppers who had pitched a tent to stay warm until the store's midnight opening, according to Charles O'Shea, a Moody's senior retail analyst.
O'Shea said he was visiting various retailers to gauge consumer traffic. The big draws are deals, like t-shirts for $6, down from $12. Bargains like those will be a fixture for the season, he said.
"There is no question that the shopper is looking for deals," O'Shea said. "Nobody wants to feel like they're leaving money on the table, especially when they have less money now."
Millions of Americans will head out to shop once they are done with their turkey dinners, getting a jump-start on "Black Friday" - the single biggest shopping day of the year, which sets the tone for the entire season.
Still, many others will be watching their pennies.
Paula Taero, a 58 year-old housekeeper from Queens, New York who was shopping on Thursday at a Kmart in Manhattan, said she is cutting back this year on her Christmas shopping.
"Santa will buy for others. I don't have so much money this year."
Wal-Mart, Old Navy, which is part of Gap Inc and KMart, owned by Sears Holdings', are among the few retailers open on Thanksgiving. Toys R Us opens Thursday evening.
To narrow the gap in store hours with rivals, discounter Target Corp, electronics chain Best Buy and department store chains Macy's Inc and Kohl's Corp will open at midnight - their earliest starts ever.
Others, including J.C. Penney Co Inc, are opening early Friday morning as they did last year.
The National Retail Federation expects sales in November and December to be up 2.8 percent over last year, but below 2010's 5.2 percent gain. So retailers, online and offline, see little margin for error.
BARGAINS OR BUST
Wal-Mart starts its Black Friday "doorbuster" deals on Thursday at 10 p.m. at its stores. Amazon.com Inc, not to be outdone, will offer its deals online at 9 p.m.
Newspaper inserts on Thursday morning were boasting of the usual "Black Friday" bargains to get people into stores. For example, Staples Inc was offering an ink jet printer for 60 percent off, while Target was offering 46-inch, high-definition televisions for about 45 percent off.
The knock-down-drag-out fight comes as the rebound in sales cooled in October, when many top chains like Macy's and Saks reported disappointing sales.
It will be even tougher for chains that have struggled with sales declines lately, like Gap and Penney.
The NRF expects 152 million people to hit stores this weekend, up 10.1 percent from last year.
But much of that traffic will be fueled by bargain hunting, analysts said, with the real test coming after the weekend when retailers see if spending happens only if there are big bargains on the table.
Last year, after a strong Black Friday weekend, shoppers sat on their hands until closer to Christmas.
This year, those looking for steals beyond the requisite "Black Friday" specials may be disappointed.
In a research note on Tuesday, Wells Fargo economist Mark Vitner said: "Bargain hunters may have a tougher time finding those markdowns this year, as retailers are keeping a sharper eye on profit margins."
Either way, middle class shoppers are also more frugal now, taking a page from their lower income counterparts, Andrew Stein, vice president of marketing planning at Sears Holdings told Reuters.
"The Kmart customer has always been a value shopper. The rest of the country is behaving like the Kmart shopper now," he said, noting that there were a lot of people at Kmart's layaway lines on Thursday.
(Reporting by Phil Wahba in New York, additional reporting by Dhanya Skariachan; Editing by Bernard Orr)