The holiday shopping season started in earnest yesterday, with retailers anxious to see if US consumers are willing to spend despite an endless stream of scary headlines about the fragile economy and their own precarious finances.
However, in the eyes of retailers, the shopping period has been churning along for some time. Stores like Wal-Mart Stores Inc and Toys R Us started early by offering layaway programs and others have offered major deals to lure shoppers.
These incentives have increased the stakes for retailers and when Americans finished their turkey dinners yesterday, many were likely to get a jump-start on “Black Friday,” the biggest shopping day of the year, and one that sets the tone for the entire season.
“If Thursday and Friday are not very good, chances are it will not pick up going up to Christmas,” said Keith Jelinek, a director at consulting firm AlixPartners’ retail practice.
WalMart, Gap Inc, Old Navy and Sears Holdings’ K-Mart were again planning to open on Thanksgiving Day to get a headstart, while Toys R Us was scheduled to open yesterday evening.
However, to narrow the gap in store hours, discounter Target Corp, electronics chain Best Buy and department store chains Macy’s Inc and Kohl’s Corp will scheduled to open their doors at midnight yesterday.
Retailers themselves concede the pressure is on.
“At the end of the day, we are trying to respond to what our customers want to do, and they are telling us that’s when they want to shop,” Best Buy company executive vice president and president for the Americas Mike Vitelli said.
Others, like J.C. Penney Co, are taking their chances and opting to open early today as they did last year.
The National Retail Federation expects sales this month and next month to be up 2.8 percent on last year, so retailers see little margin for error in their fight for sales.
The battle will also be waged online, where comScore expects sales to be up 15 percent this year.
Wal-Mart stores were scheduled to start the company’s Black Friday “doorbuster” deals at 10pm yesterday. Amazon.com Inc, not to be outdone, was set to offer deals online at 9pm, but Wal-Mart is also offering 30 percent more deals on Thanksgiving.
The knock-down-drag-out fight comes as the rebound in sales cooled last month, when many top chains like Macy’s and Saks reported disappointing sales and shoppers were hit with a steady stream of bad news about the economy.
It will be a tougher fight for chains that have struggled of late, like Gap, Penney and electronics giant Best Buy.
PriceGrabber.com, a price comparison Web site, found that searches for electronics in recent days were flat with last year, helped only by a surge in interest in new tablets like Amazon’s Kindle Fire and Barnes & Noble Inc’s Nook.
Tablet computers are the most-desired electronic devices this holiday season, and of all the gifts people are craving, tablets are second only to clothing, according to the Consumer Electronics Association. The industry group expects US consumers to spend an average of US$246 on electronic gifts, including tablets.
The iPad is still expected to far outsell other tablets this year. According to Gartner Inc, about 64 million tablets will be sold worldwide by the end of the year. Some 73 percent of them will be iPads. By Gartner’s estimate, Apple will sell 47 million iPads this year — a figure it could certainly achieve, given that it had already sold 25 million by the end of September.
However, while many think of the iPad as synonymous with the word “tablet,” plenty of shoppers will be looking for a more affordable tablet to give this year.
Two of the most promising competitors come from Amazon and Barnes & Noble. The companies, major players in the e-reader market, recently released tablets of their own that undercut the iPad’s US$499 base price: Amazon’s Kindle Fire, which costs US$199, and Barnes & Noble’s Nook Tablet, which costs US$249. The Fire, which uses a heavily modified version of Google Inc’s Android tablet software, is expected to be particularly popular with gift givers in part because of its low price.
“When you get below US$200, sales go up dramatically,” technology analyst Rob Enderle said.
Enderle thinks the Fire will be a popular gift, especially for kids. To him, it seems sturdier than the iPad with a display built from scratch and crack-resistant Gorilla Glass, and it’s cheap enough that parents won’t be upset if a child manages to break it.
Tom Mainelli, an analyst at research group IDC, expects the Fire and Nook Tablet to take second and third-place spots, behind the iPad during the last three months of the year.
Rather than hurting Apple, he believes the success of newer tablets will help grow the entire tablet market.
“I don’t think Apple loses just because Amazon wins,” he said.
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