Retailers Open Early With Discounts on ‘Black Friday’

By Amy Eagleburger and Timothy R. Homan

Nov. 28 (Bloomberg) -- U.S. retailers opened their doors at midnight and discounted merchandise as much as 70 percent on the day after Thanksgiving to counter what may be the weakest holiday shopping season in six years.

Individuals may spend an average of $616 on holiday gifts this year, down 29 percent from a year earlier, according to a Gallup Inc. poll. That raises the pressure on chains facing declining consumer confidence and the prospect of a recession.

“We’re out to save money,” said 62-year-old Jeanne Molloy, who was taking a bus from New York City to Woodbury Common Premium Outlets in Central Valley, New York, with a friend and an empty suitcase yesterday. “The economy is bad.”

Retailers promoted “doorbuster” deals to attract customers on the day traditionally called “Black Friday.” The day after Thanksgiving was said to be when retailers started to make their annual profits, having paid off their costs from sales earlier in the year.

“The consumer is programmed to buy right now,” Gilbert Harrison, chairman and chief executive officer of New York-based investment bank Financo Inc., said in a Bloomberg Television interview. “They see bargains like they’ve never seen before.”

Best Buy Co., the country’s biggest electronics retailer, opened its stores at 5 a.m. It advertised a Toshiba Corp. satellite laptop computer for $379.99, which was a $270 discount.

At the Fort Henry Mall in Kingsport, Tennessee, about 150 people milled around at 4:45 a.m., waiting for the opening of Belks Inc. and J.C. Penney Co. stores offering “doorbuster” specials on sweaters, binoculars, and luggage.

Family Priorities

Brenda Little, 42, said she was disappointed at the sales this year and said the only reason she was out at the crack of dawn was for her 14-year-old daughter, Marie, who combed the mall in search of a cheap iPod and snow boots.

Her family is cutting back their Christmas budget because of the economy, drawing names with in-laws to buy a single gift for one person rather than smaller items for everybody, Little said.

Her husband, a contractor, has survived one round of layoffs at his company, Little said. While his job is safe for now, “you still have to watch it down the road in case just after Christmas that does happen,” she said.

November and December sales at stores open at least a year may rise 1 percent, the smallest gain since 2002, according to the International Council of Shopping Centers, a New York-based trade group.

Discount Lures

Retailers used lower prices at earlier hours to win customers that were starting their holiday shopping with less than four weeks before Christmas.

Kohl’s Corp., the fourth-largest U.S. department store, opened at 4 a.m. Wal-Mart Stores Inc. and Macy’s Inc. had a 5 a.m. start.

Retail stocks have tumbled this year along with the U.S. economy. The Standard & Poor’s 500 Retailing Index was down 35 percent before today.

Wal-Mart, based in Bentonville, Arkansas, has bucked the trend, with its emphasis on low prices winning customers during the economic slump. The retailer is the only Dow Jones Industrial Average company to have risen this year. It’s gained 19 percent, while the 30-member index has tumbled 34 percent.

Black Friday discounts pulled in consumers who have felt the pinch of the economic slump and the higher fuel prices earlier this year.

‘Best Time’

“This is the best time to do it,” said Michael Strange, 41, of Washington, who lost his job earlier this year before taking a position as a transportation worker for the city.

Strange began waiting in line at a Best Buy at 1 p.m. yesterday to buy a 42-inch flat-screen television. He planned to visit a Target Corp. store afterwards to buy gifts for his two boys and intends to buy all his holiday gifts today.

“I’m shopping for the whole house,” he said.

Fitness personality Richard Simmons, wearing red-and-white- striped very short shorts, sneakers and a red muscle shirt with fluffy white Santa trim, bounced around the outside of Macy’s in New York’s Herald Square early this morning, where crowds mobbed every entrance in advance of its opening.

Richard Feijoo, 21, and his twin brother Jesus from Brooklyn were waiting at the front of the line at Herald Square and were shopping for themselves.

‘Low Prices’

“It’s low prices, a good store and it’s Black Friday, so we’re here early,” Richard said. “Jeans, Levi’s, only clothes. I go shopping at Macy’s in Brooklyn so I know exactly what I’m looking for.

“This is all about me here right now. Today we get to be selfish a little bit,” said Richard, who said his Christmas gift budget is a bit less than last year.

There were 5,000 people waiting to get in, Macy’s Chief Executive Officer Terry Lundgren said in a Bloomberg Television interview.

“A lot of folks are walking out with bags,” Lundgren said. “We got them in with great values, and what I really hoped is that they will spend more of whatever they’re going to spend at Macy’s, even if it’s less than last year.”

A drop in consumer spending in October and weakening U.S. business investment signal that the U.S. economy may sink further in coming months.

Spending Declines

Americans cut spending by 1 percent last month, the biggest decline since the 2001 recession. After adjusting for inflation, spending was down for the fifth straight month, the longest streak since 1990-1991, according to Commerce Department data.

That’s evidenced by people competing for bargains in front of stores this holiday season.

“There is no fun in this,” said Angel Croll, a single mom with two children, who arrived at a Kohl’s store in Greensboro, North Carolina, 55 minutes before it opened at 4 a.m.

More than 400 people lined up behind the 33-year-old auditor, who planned to buy two knife sets regularly priced at $99.99 each for $29.99.

Next she headed to a Dick’s Sporting Goods Inc. store for three coats marked half off at $39.99 and then to Wal-Mart for clothes, toys and a $69 Samsung digital camera. She plans to spend $400 to $500 on Christmas gifts, down from $600 last year.

“My children would not be able to get half of what I’m getting them without Black Friday,” Croll said.

To contact the reporter on this story: Amy Eagleburger in New York aeagleburger@bloomberg.net; Timothy R. Homan in Washington at thoman1@bloomberg.net