(Updated with more analyst comments)

NEW YORK ( TheStreet) -- As Black Friday kicked off today, many shoppers were eagerly anticipating taking home their heavily-discounted prize gifts. Some had been lining up since the early hours of the morning to be first in line to grab early Christmas gifts and snap up the limited inventories available in-store. Meanwhile, all eyes in the financial community were carefully watching how retailers perform in their annual battle for their share of the consumer's wallet.

Traditionally Black Friday has been known as the "make or break" day for the retail industry, where the retailers finally turn a red loss into a black profit on their books. In recent years, though, the day's importance has waned slightly.

Regardless, key retailers, such as Macy's ( M), JCPenney ( JCP), Costco ( COST) and others were offering doorbuster deals to lure customers into their stores.
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They Just Don't Get Black Friday!

Some stores such as Wal-Mart ( WMT) and K-Mart, a subsidiary of Sears ( SHLD) were already open on Thanksgiving Day.

Electronic goods were in prime demand, with Best Buy ( BBY) a key destination for the goods of electronic companies such as Hewlett-Packard ( HPQ) and Dell ( DELL) (See story: "Black Friday's 10 Top Tech Deals" By Scott Moritz -- for examples of top 10 tech deals).

Still, the weak economic environment and still high unemployment rates bode well for dusch discounters as Walmart ( WMT) and Toys R Us, which will be offering staple goods on discount to target thriftier spenders.

Even if retailers report record sales volume, analysts will be still be wary to see the effect that the significant discounts have on retailers' margins and their bottom line, and how much they are relying on "loss leaders" to generate foot-traffic into their stores. Furthermore, a spike in Black Friday sales might only signal that consumers have front-loaded their gift shopping, and that sales in the remaining weeks running up to Christmas might actually be lower.

Analyst Brian Sozzi, of Wall Street Strategies, for one, says that Black Friday is seeing a much heavier international presence in Manhattan this year compared to the year before. "In the stores you see them carrying three, four bags a person," Sozzi says.

Case in point: This morning Sozzi met a UK couple who, he says, had spent 100 pounds shopping. They said they would have had to have spent three times more money for the same items in the UK.

"They are all taking advantage of our currency right now," explains Sozzi

Meanwhile, Sozzi says, stores everywhere on Black Friday were experiencing heavy customer traffic. Sozzi notes that this is hardly surprising for Gap ( GPS) stores and Old Navy, as well as Macy's, who have been offering the most promotions. Macy's traffic has been stronger than JCPenney's, which has just opened a store in Manhattan.

Sozzi notes that Gap is selling very holiday-themed items, while Gap brand Banana Republic's has been more versatile. Overall, consumers have been taking advantage of stores that were opened on Thanksgiving, like Old Navy, Gap, Banana Republic, The Sports Authority ( TSA), Walmart and Kmart, a subsidiary of Sears ( SHLD). Meanwhile, favorable weather conditions nationwide kept consumers shopping throughout the day.

Even early in the shopping day, Sozzi had already seen lines and bag counts stronger than those of a year ago.

Retailers pulled out all the stops promotion-wise, says Sozzi. Some of the top store promotions included Aeropostale ( ARO), which was offering a 50% discount for stores all weekend. Armani Exchange offered $50 off from a $150 total purchase. Certain Sports Authority stores were offering the first 80 customers $500 gift cards.

All in all, electronics have been the top choice of items to buy on Black Friday. These deals have been strong and retailers are seeing a popular demand for navigation devices and iPods. Sozzi cautions that videogame publishers who do not have a top-tier title in the market are going to see a challenging holiday quarter. He's already seeing discounts arise across the board on games and stronger promotions on some of the leading triple-A titles.

"The whole trick is to get them into stores for the electronic goods they came for and keep them navigating other department," said Sozzi.

For shoppers who wished to avoid the crowds of people -- up to 350 in many cases, waiting in line at the checkout counters -- Sears was a smart destination.

"If you want to go to a place with no lines, go to Sears," says Craig Johnson, a retail consultant at Customer Growth Partners.

Johnson explains that although the retailer may have invented modern shopping in 1950, it has lost its way over the last six years. Its hardline products are doing fairly well, but its softline apparel and home products are still very much struggling.

"Sears store have been underinvested for many years now," Johnson explains. "Unfortunately it shows, and that's why it has lost market share to other retailers like Lowe's ( LOW) and Home Depot ( HD)." He notes that JCPenney's traffic was mixed in the morning, while Best Buy and Walmart were very crowded.

Teen retailers, especially Hollister, did particularly well in terms of customer traffic on Black Friday, says Christine Chen, a retail analyst at Needham & Co. "For the first time they are actually running specials," she says.

Hollister, operated by Abercrombie & Fitch ( ANF), offered "buy one, get one 50% off" for tops, and "spend $75 and get a $25 gift card" deals.

Every Black Friday is a mob scene at retailers, but the outpouring of crowds as big as the one she saw at Hollister was jaw-dropping for Chen. She notes that customers were literally wrapped around the checkout counters and the dressing rooms were packed. And although teenagers may get up a little later to go shopping, the shopping definitely picked up quickly at Hollister by late morning.

"Black Friday is really about the promos, so those who have limited-time promotions seems to be driving the most traffic because there is a call for urgency," said Chen.

Women's retailers like Ann Taylor ( ANN) were also offering deals -- 40% off on the whole store -- but weren't generating quite as many crowds as teen retailers. J.Crew ( JCG) wasn't busy at all, not because its business isn't doing well, but because it wasn't offering Black Friday specials, Chen explains.

-- Reported by Andrea Tse in New York

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