Retailers Ramp Up Black Friday Bargains

Promotions aplenty mark the start to the holiday shopping season.
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BUFFALO, N.Y. -- Shoppers woke up at predawn hours clamoring for bargains on Black Friday, marking the official start of what is expected to be a very promotion-laden holiday shopping season.

Retailers unlocked their doors as early as midnight, hoping to entice people with short-lived deals. Many outlet stores opened at 4 a.m., while malls opened an hour later.

The National Retail Federation estimates that about 132.9 million shoppers will be piling into stores the weekend after Thanksgiving. Holiday sales overall are expected to climb only a modest 4% for November and December combined, the smallest increase for the industry since 2002.

Ellen Davis, a spokeswoman for the National Retail Federation, says that although Black Friday may have started off with a bang, that won't necessarily translate into robust sales for the rest of the holidays.

"Although it's great news today that people are shopping, there needs to be a bit of realism that the season is still going to be a challenge for the retail industry," Davis says.

Last year, holiday sales climbed by 4.6%, totaling $456.2 billion, or 19.6%, of retail sales for the year.

Black Friday, as the day after Thanksgiving is known because of its potential to get retailers out of the red for the year, isn't the busiest shopping day of the year. But observers typically use it as an initial read on the holiday shopping season.

Many retailers are already anticipating a heavily promotional environment, factoring it into their fourth-quarter earnings. On Friday, the sales looked to be typical of years past.

Discount giant

Wal-Mart

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opened at 5 a.m., offering deals that lasted until 11 a.m., including $448 for a 32-inch Polaroid LCD HDTV, $79.87 for a

Sony

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Cybershot camera and $49.84 for an 8-inch digital picture frame.

Best Buy

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began handing out tickets to eager customers lined up in front of its stores at 3 a.m., giving them first dibs on sale items such as a 42-inch Panasonic flat panel plasma HDTV for $899.99, a Kodak digital camera for $99.99 and a VAIO laptop for $399.99.

Christine Chen, an analyst for Needham, says that for some retailers, it may not make sense to pay the additional labor costs to open stores early, but at the same time, they can't afford to be dark when everyone around them is doing the opposite.

"I think it's really competitive and retailers will do anything to get people into the stores," Chen says.

Still, there are a few exceptions. Teen retailer

Abercrombie & Fitch

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, for instance, didn't offer any special promotions on Black Friday -- in typical fashion. But Chen observed during her visit to the malls this morning that customers were shopping there nonetheless.

Aeropostale

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on the other hand, held its usual 50% off merchandise sale, while

American Eagle

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offered a 15% discount until noon. Both retailers drew large crowds, with long lines snaking in front of cash registers.

Candace Corlett, a retail consultant for WSL Strategic Retails, says she noticed retailers paying closer attention to customer service on Black Friday. At Best Buy, for instance, she says the sales staff did a good job of helping customers with questions about the merchandise.

"The lines were more orderly, and retailers paid more attention to customers service instead of just making a sale," Corlett says.

But Black Friday is still foremost about making a sale. Most of the deals are considered planned promotions, which retailers have anticipated months in advance. Chen notes that the unplanned promotions -- which are the ones that can hurt margins -- typically start in December, when retailers worry whether they'll be able to unload their inventories.

The National Retail Federation's Davis says the shoppers who flocked to stores Friday morning may be in search of a bargain because of larger economic concerns that might stifle their spending later in the season.

"If the economy was perfect, they wouldn't stand in line at 5 a.m.," she says.