Strong start to season fails to calm retail jitters

By Anne D'Innocenzio
Associated Press

The first shoppers in the door at the Wal-Mart in Bakersfield, Calif., grabbed 27-inch televisions and DVD players when the store opened at 6 a.m. yesterday. Hundreds waited in line for hours for advertised Christmas bargains. Associated Press

Major retailers including Sears, Toys "R" Us, and Wal-Mart Stores Inc., as well as several mall operators, said traffic was at least as healthy as the day after Thanksgiving last year.

The big question is whether the crowds will keep coming in the next few weeks and improve what is expected to be a lackluster holiday season.

While consumers have helped prop up the struggling economy in the last year, they have been reluctant to splurge amid worries about the job and stock markets.

"You can get euphoric (over) traffic, but we have to be realistic about what the customer will be willing to spend," said Mary Conway, an executive vice president at Sears, Roebuck and Co., which sold out of items such as its $89.99 Kenmore grills yesterday.

Retailers reported brisk sales of sweaters and outerwear, DVDs and electronic gadgets, plus hot toys such as Hasbro's Fur Real Friend, an interactive cat, and Mattel's Chicken Dance Elmo.

In a scene that played out across the country, about 500 people lined up at a Wal-Mart in Abington, Mass., before the discounter opened at 6 a.m. One big draw was a 27-inch TV priced at $149, which drew so many to Wal-Mart stores in Linden and Piscataway, N.J., that police were needed to control the crowd.

"I usually go shopping the day before Christmas, but I figured with the sale they're having, I'd come today," said Linda Maccarrone of Abington, who joined the line at 5:15 a.m.

In Bismarck, N.D., Wendy Anderson, 37, came out of K-B Toys with two large bags stuffed with items, including Hasbro's Fur Real Friend.

"I pretty much ran through the store. Eleven minutes to shop, save $200," she said as she gleefully left the store.

The lack of must-haves, combined with a season six days shorter than a year ago, exacerbates what is expected to be a difficult holiday, given the sluggish economy. A shorter selling season puts more pressure on merchants to guess what will be the best-selling items and keep them in stock.

Of course, things could turn out better than expected.

A year ago, a last-minute buying binge helped produce better-than-expected results, preventing what analysts had anticipated would be a disastrous season after the Sept. 11 terrorist attacks.

In 2000, analysts were too optimistic, forecasting solid gains. In fact, sales fell off sharply in late November and never recovered.

"Things can change dramatically, even in a week," said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd.

In fact, retailers, who have kept inventories lean to avoid getting stuck with mounds of inventory on Dec. 26, run the risk of running out if shoppers decide to splurge.

Already, there were plenty of disappointed shoppers yesterday.

Pat Bell, 54, of Greenfield, Wis., said she found bargains and clothes and a home spa at her local mall, but Toys "R" Us was out of the popular Fur Real Friends by the time she arrived by 8 a.m.

"They're out in the paper, and you go and they're gone," she said. "They gave out hundreds of rain checks, but the guy said don't even bother, because they won't get them before Christmas."

Still, retailers have seen few signs for optimism.

"Expectations are low. Clearly, there is still considerable amount of uncertainty — the prospect of war in Iraq and the economy," Niemira said.

The Washington-based National Retail Federation predicts total holiday retail sales — excluding restaurant and auto sales — will increase by 4 percent to roughly $209.25 billion, the weakest increase since 1997.

Last holiday, retailers had $201.2 billion in sales, a 5.6 percent increase from the year before.

Financial worries clearly were on the minds of shoppers such as Lisa Blankenship, 25, at the upscale Gallery at Harborplace in downtown Baltimore. She was visiting from New York, where she works at an asset management firm.

"Christmas bonuses aren't going to be (as big) this year," said Blankenship, who plans to spend a couple hundred dollars less her usual $700.

And some shoppers found the discounts did not meet their expectations.

Anselmo Mathew, who was shopping at Macy's in Atlanta, had planned to shop all day, but quit early.

"I don't see where all the great sales are," he said. "I went to the Fourth of July sales and they were better than this."