Shoppers’ Quest for Bargains Boosts Sales

Bombarding shoppers with bargains apparently pumped up sales for the nation’s retailers, which posted a better-than-expected start to the holiday shopping season, analysts said Sunday.

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’s 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’s 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.

It evidently worked over the weekend.

Sales jumped 12.3% on Friday and 9% on Saturday compared with 2001, according to ShopperTrak’s estimates, which are derived from Commerce Department sales data. Overall, estimated sales for the two days were $12.6 billion, up 11% from last year.

A separate survey of 7,000 people by the National Retail Federation, the nation’s top retail trade group, found that 75% of U.S. consumers went shopping over the weekend, spurred on by a relatively short span between Thanksgiving and Christmas this year 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 could have “pulled forward some sales that might have come over the next week or two or three,” he added. “That’s the worry.”

The shopping season between Thanksgiving and Christmas typically accounts for about one-quarter of U.S. retailers’ sales.

Discount retailers, which used sharp markdowns on items such as 27-inch televisions, diamond jewelry and Barbie dolls to lure shoppers Friday, clearly were the early winners.

Bentonville, Ark.-based 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% jump over the day after Thanksgiving last year.

The shopping frenzy had visibly calmed by Sunday morning at Glendale Galleria, where there was no wait to see Santa. He and his elves looked bored at the North Pole outpost until a family with three small children showed up -- and received lavish attention.

An hour after the mall’s doors opened, it was still easy to get a parking spot in less than a minute, and numerous gift stores, such as Games Workshop, Sanrio Surprises and the Game Keeper, were so quiet that employees passed the time in conversation.

Major toy retailer KB Toys and the Disney Store each had a dozen customers, but lines at the registers moved quickly.

By 11 a.m., the activity had picked up, but it still was laid back compared with the mob scene Friday.

Retail experts had expected a particularly frantic dash to stores at the start of this holiday season because it includes only four weekends instead of five. They surmised that shoppers would panic about the dwindling days until Christmas.

But shoppers are making headway, according to the retail trade group’s survey, which showed that the average consumer had completed almost 40% of holiday shopping by Saturday.

Last year, the day after Thanksgiving was the sixth-busiest sales-generating day of the season. The weekend accounted for 8.4% of holiday sales, according to the International Council of Shopping Centers.

For all of November and December, the National Retail Federation has predicted that holiday sales will rise 4% this year over last, which would mark the smallest increase in five years.

Comparisons with last year are difficult to evaluate because some retail experts believe that shoppers in the earlier period still were stunned by the Sept. 11 terrorist attacks.

On the day after Thanksgiving last year, sales nudged up just 2.7%, compared with an 11.1% increase in 2000. But consumers then picked up the pace last December as desperate retailers slashed prices.

In addition, 2001 boasted the warmest November in 108 years, according to Michael Baker, an economist with the International Council of Shopping Centers. That meant consumers shunned cold-weather clothes that help fuel sales.

“A lot of apparel retailers were wringing their hands this time last year,” Baker said. “This year, we’re hoping apparel is going to move a lot better.”

Baker noted that disposable income is up about 3.9% compared with 2001 and that a wave of mortgage refinancing has allowed people to turn home equity into cash or at least reduce their mortgage payments.

“We know there are resources out there for consumers to draw on in terms of spending power,” he said.

Nonetheless, Baker did not boost his November-to-December sales projections, even after Friday’s onslaught of shoppers.

That’s because consumers are still grappling with so much uncertainty, what with a lack of employment growth, terrorism concerns and the possibility that a war could pull the nation back into recession.

“There are all sorts of things on people’s minds at the moment,” Baker said. “Most likely, they are going to curb spending.”

*

Times staff writer David Colker contributed to this report.