Black Friday draws millions of Americans to stores in holiday season kick-off

BLACK FRIDAY: Shoppers browse inside a Best Buy Co. store in Peoria, Illinois (Bloomberg)

Sarfy Sheikh came to the United States just two years ago from Mumbai and has quickly assimilated to at least one aspect of American culture: Black Friday.

The 33-year-old software salesman from Manhattan began standing in line with his wife at a Macy's store in Manhattan at around 4:30 pm Thursday for its midnight opening, hoping to score Ralph Lauren and Calvin Klein wares.

"Black Friday is awesome," said Sheikh. "You get good stuff, which you would pay a lot for otherwise. It's human nature to look out for deals."

Sheikh was one of millions of shoppers who went to stores Thursday night and Friday morning as the unofficial start to the holiday shopping season got under way. With consumers facing a sluggish economy and the threat of tax increases over the so-called fiscal cliff, this weekend will serve as a barometer of what's to come for retailers in the next five weeks.

To get shoppers to spend more than last year, retailers have continued to turn Black Friday, originally a one-day event after Thanksgiving, into a week's worth of deals and discounts. A couple of years ago chains started opening at midnight and Thursday Wal-Mart Stores and Toys "R" Us pushed it to 8 p.m. on Thanksgiving. Other chains began offering Black Friday deals online as early as last weekend.

How much expanding Black Friday actually boosts sales remains to be seen. Some industry analysts say it shifts sales earlier in the season rather than increasing demand. That was the case last year for several chains, including Target Corp.

Other analysts maintain that it's an opportunity for one chain to steal sales from a competitor. At a minimum, it can help a retailer boost marketing through press coverage and shoppers telling friends about the deals, said David Schick an analyst for Stifel Financial Corp. in Baltimore.

"Essentially, this is a game of making headlines," Schick said. Holiday sales are "going to be up or down based on the economy, merchandising and execution. The Black Friday hours aren't the secret to that."

While execution is the responsibility of each retailer, chains will have increasingly confident consumers visiting stores this weekend. More Americans this month said the economy will improve than any time in the past decade, according to the Bloomberg Consumer Comfort Index. The share of households saying it would get better rose to 37 percent, the highest since March 2002. A year ago, the measure showed a record number of consumers said it was a bad time to spend.

Charlie and Amber Hall are more confident in their finances than last year. The couple blew past their $600 Black Friday budget by filling two carts last night at a Wal-Mart location in Reidsville, N.C., with dolls, toys, an easel, pillows and a Sony Corp. stereo for themselves and their three children.

"The economy is picking up," said Charlie, 36, who installs residential heating and air-conditioning systems. Amber, 29, works part-time in health care. "We've got plenty of work and I'm working 40 hours plus every week," he said.

A rebound in housing and the job market along with a drop in household debt, has led additional consumers to say they'll buy more this holiday, according to a survey this month by the Credit Union National Association and the Consumer Federation of America. Of those polled, 12 percent said they would ramp up spending, the highest level since 15 percent in 2007.

"I'm feeling better about things," said David Aguilar, 24, of Manhattan, as he shopped last night at the Toys "R" Us store in Times Square. Aguilar waited in line for an hour and a half for the 8 p.m. opening that drew about 1,000 people. This marked his first Black Friday shopping because he couldn't pass up a deal to buy one video game for Nintendo's recently released Wii U console and get a second at 40 percent off. "You can't get a deal like this anywhere," he said.

The National Retail Federation says holiday sales will rise 4.1 percent to an estimated $586.1 billion this year, compared with a 5.6 percent gain in 2011. Even though thousands of stores are opening earlier, 147 million consumers, or 5 million fewer than last year, plan to hit the malls this weekend, according to an NRF survey conducted by BIGresearch.

A drop in shoppers didn't seem to be the case at a Target store in Trotwood, Ohio, where Kelly Long waited two-and-a-half hours Thursday for the 9 p.m. opening to get her hands on a $147 32-inch Apex LCD HDTV and a $499 Canon digital SLR camera.

"I like to go to the stores," said Long, 33, a data analyst at a health-services provider. She planned to spend more this year because the sales are better.

Holiday sales may also get a boost from there being 32 days between Thanksgiving and Christmas this year compared with 30 in 2011, Jennifer Davis, an analyst at Lazard Capital Markets in New York, wrote in a note.

Weather may help gains too as colder temperatures increase sales of sweaters, boots, scarves, gloves and jackets, according to weather-data provider Planalytics Inc. Last year's Black Friday was the warmest in five years, the Berwyn, Pa.- based firm said in an email.

Another trend this year: putting the same so-called doorbuster deals — the limited-supply discounts used to draw shoppers to stores — on the Web first. Target, which opened on Thanksgiving for the first time, also offered the same deals it normally would reserve for stores on its Website two days ago. Staples posted what it called pre-Black Friday deals online on Nov. 18.

That strategy could backfire because doorbusters are meant to lure people into a store with deals that in many cases are money losers, and get them to make other purchases, according to Paul Swinand, a retail analyst for Morningstar Inc. in Chicago. That dynamic isn't as prevalent on the Web, he said.

"The only reasons loss leaders work is if there is some kind of momentum in the buying patterns," Swinand said. "To me, there is less momentum in online loss leaders."

Still, the Web is becoming increasingly important during the holidays with online sales expected to gain 12 percent to $96 billion, three times as fast as total sales, according to the NRF.

While shoppers flocked to stores after their Thanksgiving meals, not everyone is a fan of the extended hours. Workers and their supporters have signed online petitions saying they are unfair because lose time with their families. That may also damage employee morale, which can lower customer service, said Swinand, the Morningstar analyst.

A group of Wal-Mart employees backed by the United Food & Commercial Workers Union added the Thanksgiving hours to its list of complaints as they put on protests at Wal-Mart locations in an effort to sway shoppers to their side. Actions took place at several Wal-Mart stores across the country beginning last night.

Labor strife didn't deter Hall from checking everything off her list at Wal-Mart.

"I was telling my momma that it's a shame stores are opening earlier and earlier on Thanksgiving," she said at the checkout line where 10 carts were backed up behind her. "But the stores got to do what they got to do."

— With assistance from Sapna Maheshwari, Renee Dudley, Lauren Coleman-Lochner and Elizabeth Dexheimer in New York, Chris Burritt in Greensboro, N.C., and Leslie Patton in Chicago.