Black Friday, Cyber Monday Efforts Lure Shoppers

Drumbeat of Promotions Help Retailers Over Weekend, but Holiday Forecast Still Bleak

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NEW YORK (AdAge.com) -- Promotional advertising turned the tide over the holiday weekend as shoppers stormed stores in search of deals. But it's still expected to be among the toughest seasons in recent memory for retailers.

The National Retail Federation projects that 172 million shoppers hit stores in the three days following Thanksgiving, up 17% from last year. On average, each shopper spent $373, up 7% from last year. Retailers' total take for the weekend is estimated at $41 billion.

"Pent-up demand on electronics and clothing, plus unparalleled bargains on this season's hottest items, helped drive shopping all weekend," said Tracy Mullin, NRF president-CEO. "Holiday sales are not expected to continue at this brisk pace, but it is encouraging that Americans seem excited to go shopping again."

Forecast still modest
Indeed, while weekend sales buoyed struggling retailers, projections for the holiday season are still modest. NRF expects a 2.2% rise in holiday sales, which would represent the slowest season since 2002. In recent months, consumers have cut back on discretionary spending.

Discount stores continued to boast strong traffic, with 55% of shoppers visiting over the weekend, according to an NRF-BIG Research study. Department stores also grabbed their fair share of shoppers' attention, thanks to heavy promotional advertising. In the days leading up to Thanksgiving, both JCPenney and Macy's advertised hundreds of "Black Friday" and "Cyber Monday" specials, for example. JCPenney went so far as to tout the "biggest Black Friday sale in company history." Department store visits were up 11% over last year, with 43% of shoppers filing through the doors.

Today's Cyber Monday promotions (the official start of the holiday online shopping season, or the Monday after Thanksgiving) are largely expected to mirror brick-and-mortar trends from the weekend, according to Shop.org. Retailers are being more promotional, with 84% planning to offer deals, up from 72% last year. And those deals are expected to bring out 18% more shoppers, with 85 million people projected to take advantage of Cyber Monday deals.

One-day spike might not be enough
Still, a jump in online traffic today might not be the boon online retailers are looking for. Instead, it seems online shoppers held back during the last few days in anticipation of good deals. On Thanksgiving Day, traffic among the top 500 retail websites was down 11% year over year, according to Hitwise, an online measurement firm. On Black Friday, traffic was down 5%, and on Saturday it declined 8%. An exception was Sears, whose website crashed for large chunks of Black Friday due to heavy traffic.

Retailers are expected to keep up the promotional pace even though huge crowds over the weekend and today have enabled them to work through inventory. A condensed shopping season and difficult economy has increased their sense of urgency, according to analysts. There are now just 24 shopping days until Christmas, compared to 29 days last year.

The holiday season "began with a bang" thanks to plenty of discounts, wrote Eric Beder, an analyst with Brean Murray Carret & Co. Still, Mr. Beder said he is maintaining his negative outlook for the season and the first half of 2009. He noted "jaw-dropping" discounts at the mall and said that advertised promotions of 50% to 70% at Aeropostale, for example, indicate deeper cuts are to come.

"Though retailers should be encouraged by strong traffic and sales over the weekend, consumers are still being cautious," said Phil Rist, exec VP-strategic initiatives at BIG Research. "Weekend shoppers indicated that they are still sticking to a budget and thinking carefully before making any holiday purchases."
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