SAN FRANCISCO (Reuters) - Consumers spent significantly less at the start of the holiday season this weekend, dimming hopes for a retail comeback that would help propel the economy early in 2010.
While shoppers turned out in force as early as Thanksgiving Day on Thursday, many said they had zeroed in on highly discounted items, would buy only what they needed and would walk out of a store if they did not find a good deal.
“Shoppers proved this weekend that they were willing to open their wallets for a bargain,” said National Retail Federation Chief Executive Tracy Mullin in a statement on Sunday. Retail chains “know they have their work cut out for them to keep people coming back through Christmas.”
Consumers said they will have spent nearly 8 percent less on average, or about $343 per person, over the weekend that includes Thanksgiving, Black Friday and runs through Sunday, according to the NRF.
Traffic to stores and websites rose to 195 million people from 172 million in 2008, but shoppers were focused on buying low-priced items, like $10 toys and $9 books, the NRF said.
The NRF has forecast a 1 percent decline in holiday sales this year, which would mark an unprecedented drop for two straight years after a global financial crisis erupted in 2008.
Total retail sales edged up just 0.5 percent to $10.66 billion on Black Friday, which is often the single-busiest day of the holiday shopping season, ShopperTrak said on Saturday.
Online retailers, however, enjoyed an 11 percent jump in Black Friday spending to $595 million, with Amazon.com and Wal-Mart Stores Inc’s Walmart.com enjoying the biggest surges in traffic, according to comScore.
Retailers had warned investors they would take a conservative view of holiday sales and have cut inventory and reduced expenses to compensate.
"You're clearly down on a two-year run rate," said Bill Taubman of mall operator Taubman Centers Inc. But he added, "margins are going to be extremely good because (retailers) have been careful about what they bought." For a graphic on U.S. holiday sales trends, click here
Shoppers interviewed across the country by Reuters over the weekend said they were lured by bargains, but would stick to pared-down budgets.
“If they don’t have rebates and sales before Christmas, I don’t think people are going to go back shopping after Black Friday,” said Joel Wincowski, a higher education consultant shopping at a Best Buy store in Plattsburgh, New York. He bought an Xbox 360 game console for $299.
“We’re going to cut back on everybody, even the kids.”
Discount chains like Walmart, department stores and higher-end chains like Saks Inc seemed to have lured more spending and avoided steep discounts, retail consultants and executives said on Sunday.
“The market has had a negative bias toward the state of consumer spending,” said Bill Dreher, senior analyst at Deutsche Bank. “We continue to believe that there are pockets of strength with discount retailing doing very well, with select luxury retailers doing very well, like Nordstrom and Saks, which have brought down their price points.”
Specialty apparel chains, however, may face another tough year as they relied on heavy promotions to draw shoppers.
“Going through the mall on Friday, the stores that had not been doing as well — AnnTaylor, Limited, Gap — were very aggressively promoting,” said Jeff Edelman, director of retail and consumer advisory services at RSM McGladrey.
Edelman expects holiday sales to be flat this year, but he said he expected profits for most retailers to be higher.
The NRF said shoppers’ destination of choice appeared to be department stores, with nearly half of holiday shoppers visiting at least one. A little more than 43 percent of shoppers said they went to a discount retailer this weekend.
Additional reporting by Jessica Wohl in Chicago and Phil Wahba in New York; Editing by Michele Gershberg, Matthew Lewis and Maureen Bavdek