RETAIL SALES A strong start for holiday season

But analysts worry that the bargain-fueled buying spree will fizzle.
LOS ANGELES TIMES
Bombarding shoppers with bargains apparently worked in pumping up sales for U.S. retailers, who posted a better-than-expected start to the holiday shopping season, analysts said.
Yet, it was far from clear whether U.S. retail sales will end up stronger this year, or fizzle as December unfolds. Some analysts worry that with shoppers increasingly intent on snagging bargains, there is a risk that prices will have to fall even lower to keep them motivated.
"Once you start how do you stop?," said Barbara Johnson, managing partner at ShopperTrak RCT, which released estimates of national retail sales Sunday. "They've got to hit with bigger discounts as they get deeper into the season. If you start with a big discount, where are you going to end?"
The risk is that shoppers begin seeing the lower price as the norm, Johnson said, a phenomenon that is already occurring, especially among apparel and electronics retailers.
"I think right now they're doing whatever they can to get the consumer to buy," she said.
The numbers
It apparently worked over the weekend.
Sales jumped 12.3 percent on Friday and 9 percent on Saturday, compared with 2001, according to ShopperTrak's estimates, which are derived from U.S. Commerce Department sales data. Overall, estimated sales for the two days was $12.6 billion, up 11 percent from last year.
A separate survey of 7,000 consumers by the National Retail Federation, the nation's top retail trade group, found that 75 percent of the nation's consumers went shopping over the weekend, spurred on by a shorter shopping season between Thanksgiving and Christmas and heavy promotions of on-sale merchandise.
"What we're seeing is basically a strong start, one that I think really does increase the confidence level that we can do relatively well this holiday season," said economist Michael Niemira. But retailers "might have pulled forward some sales that might have come over the next week or two or three. That's the worry."
The holiday shopping season between Thanksgiving and Christmas typically accounts for about a quarter of U.S. retailers' sales.
Early winners
Discount retailers, which used sharp markdowns on everything from 27-inch televisions, diamond jewelry and Barbie dolls to lure shoppers on Friday, were clearly the early winners.
Wal-Mart Stores Inc., the world's largest retailer, said its sales hit a one-day record of $1.43 billion on Friday, a 14 percent jump over the day after Thanksgiving last year.
Retail experts had expected a particularly frantic dash to stores at the start of this holiday season, since it includes only four weekends this year, instead of five. They surmised that shoppers would panic about the dwindling days until Christmas.
For all of November and December, the National Retail Federation has predicted holiday sales will rise 4 percent this year over last, which would be the smallest increase in five years.