NEW YORK (Reuters) - U.S. shoppers may stretch tight budgets this year to reward loved ones after months of thrift, a softening of heart that store chains hope will erase the holiday season sales debacle of 2008.
Retailers from Wal-Mart Stores to Gap, RadioShack and Walgreens opened their doors on Thursday as U.S. families celebrate Thanksgiving, aiming to capture early bird shoppers a day before the official start of holiday shopping on “Black Friday.”
The unsettled state of the U.S. economy, with a 26-year high in unemployment and tighter access to credit, has industry holiday sales forecasts varying from a decline of 3 percent to an increase of 2 percent.
“The consumer is confused. They don’t know whether to spend or not,” said Marshal Cohen, senior analyst at retail consultant NPD Group.
Carlos Abril was browsing at an Old Navy in Manhattan on Thursday, but said he would not shop nearly as much this year.
“It’s tough this year, so we’re cutting back,” he said. Abril does not plan to spend on himself but would buy gifts for his nephews and other children in his family.
A weak U.S. dollar, however, has been a boon to tourists.
“Stuff is always cheaper here anyway and even more so with the dollar,” said Katy Moore, a visitor from Ireland, who was shopping at Foot Locker. She exited the store with a bag and said she would spend quite of bit of money while on vacation.
As the year-end holidays draw closer and deeper discounts beckon, consumers may splurge a bit more. Industry experts expect a strong turnout on the Black Friday weekend, but caution it will not mean a bumper holiday season as shopping trails off in the weeks before Christmas.
“The recession last year was a shock to the consumer. This year they are already tired of it,” Cohen said. “They might even reward themselves for being frugal for the whole year.”
The psyche of American shoppers is being closely watched, as a return to spending would drive overall U.S. economic growth. Early hopes for a consumer-led recovery have pushed retail shares up 47 percent this year, compared with a 23 percent rise for the Standard & Poor’s 500 Index.
Cohen, a 30-year industry veteran, travels to malls all along the U.S. East Coast over the holiday weekend. He now sets out on Thanksgiving Day as so many more stores open on the holiday itself. While traffic to stores on the Thursday is relatively light, people who do make it out are mostly hard-core shoppers and highly likely to buy.
“It’s the ultimate conversion factor,” he said.
For a graphic on U.S. holiday sales trends, click on (here)
For a Reuters Insider segment on holiday sales, click on(link.reuters.com/wuj63g)
MILLIONS TO SHOP, BROWSE
Up to 134 million U.S. consumers say they may shop for holiday gifts this weekend from Black Friday through Sunday, according to the National Retail Federation.
That is up from last year’s survey, taken weeks after a global financial crisis erupted, but still below consumer Black Friday plans reported ahead of the shopping season in 2007.
While most research in the last two months showed shoppers planned to spend less or the same in 2009 from a year ago during the holidays, that stance may be softening.
Nearly one-third of consumers surveyed by Deloitte said they now expect to spend more on the holidays than they had planned a month or two ago. Of those shoppers, 86 percent said they would spend more on gifts than previously thought.
The survey, conducted last week, polled 1,051 people with a margin of error of plus or minus 3 percent.
Retailers insist they will stand firm this year and not offer the profit-sapping discounts used to clear merchandise off shelves last year. Cohen estimates that markdowns won’t dip below 50 percent off, compared with the multiple discounts of 75 percent and more last year.
While that should help protect margins, it could prove to be a major disappointment to customers.
“With inventories so low, we don’t see the same level of promotion as we saw in prior years, which ought not to attract as many customers,” said David Berman of hedge fund Durban Capital in New York, which specializes in consumer and retail-related stocks.
Even the Black Friday tradition of midnight madness, in which consumers lined up ahead of store openings in the dead of night, may be waning. Many Walmart stores will be open straight through from Thanksgiving Day after a worker was trampled to death last year, while the nation’s biggest chains have already touted huge promotions online for days.
“This year, we are getting Black Friday sales for weeks before Black Friday at Sears, Kmart, Wal-Mart and Best Buy, among others, and have the ability to buy just about every ad online,” Credit Suisse analyst Gary Balter wrote in a note lamenting the lost thrill of Black Friday hunting.
“That is going to hurt sales of winter clothing, as we won’t have to stand in below-zero temperatures for that sliver of a savings,” he said.
Additional reporting by Phil Wahba and Jennifer Ablan; Editing by Steve Orlofsky
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