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Saturday, November 27, 2010

Retailers slow discounts after,Black Friday

(Profile Facts) - Retailers scaled back discounts and shoppers were less frenzied on Saturday, a day after the mad rush for "Black Friday" bargains kicked off the holiday shopping season.

The strategy of easing up on discounts makes sense considering the strong kick-off to the busiest selling season of the year and that retailers have almost a month to sell their goods before Christmas Day, analysts said.

"For the retailer, the holiday season is more of a marathon than a sprint," Moody's analyst Scott Tuhy said. "We still have 28 shopping days to Christmas."

"As retailers seek to keep momentum going, obviously you can't do yesterday (Black Friday) day after day for 28 days," he told Reuters.

Wall Street Strategies analyst Brian Sozzi thinks fewer discounts on Saturday are part of a plan, with retailers likely to ramp up promotions again in two days for the so-called "Cyber Monday," which is geared toward online shoppers.

Analysts and retail experts forecast this to be the best holiday season in three years, with the economy showing some signs of improving, though unemployment remains stubbornly high.

Consumer spending accounts for about 70 percent of the U.S. economy, which makes "Black Friday" and the rest of the holiday shopping season a closely watched proxy for the state of the economy as a whole.

Retail stocks have rallied on investor hopes for a better-than-expected holiday season. The Standard & Poor's Retail index closed at its highest level in over three years on Wednesday but was off 0.36 percent on Friday.

Many retailers saw longer lines on "Black Friday" this year as U.S. shoppers opened their wallets to scoop up bargains on everything from laptops to hoodies to cute collectible toys.

"The Christmas holiday shopping season has gotten off to a strong start for us. Across the country, consumers appear to be more eager to shop than the last couple of years," J.C. Penney Co Chief Executive Mike Ullman said on Saturday.

The comments echoed those from chiefs of top retailers such as electronics chain Best Buy Co and toy seller Toys R Us.

At the same time, a slowing pace of discounts is good for retailer margins.

"If sales are building up (slowly) but it's selling at better margins, that's fine. That's better than having a lot of sales and having unusually high discounts to get those sales," Tuhy said.

The National Retail Federation has said up to 138 million people could hit stores this weekend. The industry trade group forecast a 2.3 percent increase in sales during November and December, up from a 0.4 percent rise in 2009.

For shoppers like Chris and Kristen Hellinger, who were waiting for a Best Buy in Jersey City, N.J., to open on Saturday, the day after the day after Thanksgiving was a more relaxing time to shop.


(source:reuters.com)

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