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Black Friday sales: How deep will the discounts be this year?

Big discounts await shoppers during Black Friday sales the day after Thanksgiving. But later in the season, price cuts are unlikely to be as deep as they were last year.

By Ron Scherer / November 23, 2009

Shoppers try out digital cameras at a Best Buy store in Cambridge, Mass. Retail experts predict sluggish preholiday sales figures again.

Sarah Beth Glicksteen/The Christian Science Monitor

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New York

Kohl's will sell Tony Hawk jackets and T-shirts at 50 percent off. Sears will slash the price of a Curtis Compact DVD player by 40 percent. Target wants to entice you into a store by offering 18 percent off a Garmin Global Positioning System.

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These are some of the big discounts slated for Black Friday – one of the most important shopping days of the year for retailers, when they get a good sense of the strength of holiday sales, and hence their yearly profits. Just like last year, when stores were so desperate to make sales that they practically paid you to shop there, retailers are chopping prices on certain goods to get you in the door on Nov. 27.

This year's loss leaders are electronics, certain toys, and brand-name clothing, like that from skateboard icon Tony Hawk. But beware: Sale items may sell out quickly, and discounts later in the holiday season are not likely to be as deep as they were in 2008.

"There will be more bargains earlier and less later in the season, because last year the retailers got caught with a lot of inventory," says Kevin Strawbridge, CEO of DealTaker.com, a website that publishes Black Friday promotions. "We are telling people, ‘If you see a deal early and it's something you want, buy it.' "

The discount strategy should work, say retail analysts. A recent case in point: "Cash for Clunkers."

"There were more shoppers than cars," says Bill Martin, cofounder of ShopperTrak, a Chicago-based retail analysis firm. "Once the program ended, the showrooms are empty again."

Even before Black Friday, some retailers were offering special promotions, in a bid to ace out the competition. Target, for example, was selling toasters and coffeemakers for $3 apiece and a 32-inch high-definition television for $246.

"Target is being really aggressive because they want to compete head-on with Wal-Mart," says Mr. Strawbridge.

But even with the promotions, it could yet be a bah-humbug season. The National Retail Federation (NRF) forecasts a decline of 1 percent in holiday sales over the same period last year.

"We are seeing the consumer lagging the rest of the economy," says Rosalind Wells, NRF chief economist. "The reasons the consumer is lagging [are because] the employment situation is so dismal and there is no income growth – both factors that propel consumer spending."

In the past, many consumers used their homes as piggy banks, getting home equity loans that took advantage of rising home values. But with home prices falling, this option is gone. The stock market is up more than 20 percent this year, but, as Ms. Wells notes, "the average person is not in the market that heavily."

If NRF's forecast is correct, 2009 will be the second down year in a row for retailers. Last year, holiday sales fell almost 6 percent from the same period in 2007, the steepest drop in 40 years. To try to prevent that, retailers are getting creative.