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Retail season starts strong, but a long haul ahead

Sales were better than expected this past Black Friday, but will it last till Christmas?

By Ron SchererStaff writer of The Christian Science Monitor / December 1, 2008

A good friday: Sleepy families lined up with their holiday bargains at the checkout counters at K-Mart in Bossier City, La., Nov. 28. Sales were better than expected this past Black Friday.

Mario Villafuerte

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New York

In Rochester, N.Y., the roads were clogged at 4 a.m. last Friday as shoppers hit the malls looking for bargains. In Burlington, Mass., it took as long as 25 minutes to find a parking spot early that day. And at Lenox Square in Atlanta, throngs of shoppers hunted for discounts at shoe retailer Nine West.

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Yes, Americans love the sound of 40 percent off. The deep discounts and promotions, retail analysts believe, were successful at getting Americans to open up their pocketbooks on Black Friday, one of the biggest shopping days of the year. Sales rose 3 percent above 2007 levels – better than expected, according to ShopperTrak RCT, a tracking firm based in Chicago.

But will the throngs be back in mall parking lots for the weeks before Christmas?

"Black Friday was strong because it always is. This is the starting gun," says Richard Feinberg, a professor at the Purdue Retail Institute at Purdue University in West Lafayette, Ind. "But this is a marathon, and by the 20th mile, consumers will be out of steam."

Even ShopperTrak warned that the decent Black Friday numbers may not last through the season.

If consumers do start to fade, it will be another blow to the economy, which has already been hit hard by the decline in housing prices, the stuttering stock market, and rising unemployment.

"This could be the worst holiday period since 1982, when we were coming out a recession," says Mark Zandi, chief economist at Moody's "That means the first half of 2009 will be very, very tough."

Retailers count on a big pickup in sales during the holidays to help them the following year.

"Take Macy's. When their sales aren't so strong, they won't hire as many people next year, or expand as much or buy as much merchandise," explains Mr. Feinberg of Purdue. "There is a longer-term negative effect than simply what will happen this quarter."

On Friday, the National Retail Federation tried to remain positive about the outlook. It still expects a 2.2 percent increase in holiday spending over last year, says Scott Krugman, a spokesman for NRF. Before any lowering of that projection, he says, "we want to see how Black Friday plays out and the first half of the [holiday shopping] season."

Retail activity was busiest in the South, where it was up 3.4 percent, and in the Midwest, up 3 percent, according to ShopperTrak. The slower areas, ShopperTrak said, were the Northeast, up 2.6 percent, and the West, up 2.7 percent.