Black Friday takes a hit from the economy

Big shopping day is not a bonanza for many retailers

Reginald Decastro of Foxborough was attracted to discounted DVDs at Circuit City. (ARAM BOGHOSIAN FOR THE BOSTON GLOBE)

Stores across the region opened their doors before dawn yesterday with mixed results: Deals on electronics apparently drew avid shoppers, especially at discount chains, but other retailers saw modest crowds of penny-pinching consumers.

Among shoppers, "there's less of a sense of urgency than we've seen in the last few Black Fridays," said Marshal Cohen, chief retail analyst at The NPD Group. "Last year they were pushing the cart in and coming out with a big-screen TV. This year, they're definitely not running around with their arms full."

By 9 a.m., the number of shoppers at CambridgeSide Galleria was about flat compared with last year. But by 8 p.m., customer traffic was up about 5 percent, though sales were relatively even, according to the mall's general manager, Issie Shait.

"It turned out better than I thought," he said. "There was a lot of uncertainty about whether people were going to come out. I don't know what's going to happen for the rest of the weekend."

At 4:30 a.m., about 30 people were in line outside Circuit City at Patriot Place, a relatively new shopping complex in Foxborough - about the same number as last year.

"This year is like the big Patriot Place experiment," Circuit City's operations manager, Tom Canals, said shortly before letting shoppers in the store at 5 a.m. "We don't have any expectations."

Preliminary reports from major retailers including Macy's, KB Toys, Best Buy, and Toys "R" Us, and mall operators across the country said the crowds were at least as large as last year's. But the National Retail Federation is projecting an 11 percent drop, or about 6 million fewer people who will shop over the Black Friday weekend. And nearly half the people in a recent survey said they plan to spend less than they did last year, according to BIGresearch, which also conducted the retail federation survey forecasting fewer shoppers. Black Friday historically is the time of year when retailers turn a profit.

If sales during this weekend are lackluster, analysts say that it probably reflects consumer anxiety amid the economic downturn, the plunge in the stock and housing markets, and an increasing number of layoffs. To move their goods, many retailers will have to aggressively cut prices.

The holiday shopping season matters to more than just retailers. Consumer spending drives nearly two-thirds of the economy.

"If the holiday season shows consumers retrenching in extreme ways, it tells us the recession is going to be deep," said Nigel Gault, chief economist for the research firm IHS Global Insight in Lexington.

Consumer belt-tightening is adding to the pain of retailers, who were already bracing for a stunted holiday season. The onslaught of liquidation sales with steep discounts at bankrupt retailers such as Linens 'n Things, Circuit City, Steve & Barry's, and Tweeter adds to the misery of solvent big-box merchants and chain stores. Additionally, Europeans who flocked to shops last year to take advantage of the weak dollar are staying home as their own countries sink into recession.

To be sure, people lined up yesterday to take advantage of sales such as the $400 Hewlett-Packard laptops at Circuit City and 32-inch Emerson flat-screen, high-definition televisions at Wal-Mart for $388.

A line of customers wrapped around Wal-Mart in Framingham until 5 a.m., when the store opened. It took 10 to 15 minutes for everyone to file into the store. Once inside, shoppers swamped the electronics section.

Frank Chiavarini, a Hopkinton landscaper, was one of the first shoppers in and out of Wal-Mart. He bought the Emerson TV. The gift was a present for his family, he said.

Normally, it would have cost $499, he said, which made the purchase a no-brainer. "I saw it on the Internet last night and said 'I've got to get it,' " he said.

There are limited numbers of doorbuster deals at each store on Black Friday and shoppers line up early to snag the items. Retailers hope consumers buy other products while they are shopping.

A similar scene played out at CambridgeSide Galleria's Best Buy, which sold out all its advertised laptop packages by 7 a.m. yesterday except for the most expensive one: the $900 Sony laptop bundled with antivirus software and a "Casino Royale" DVD. The doorbusters prompted Black Friday first-timer Edgar Martinez, 20, to brave the 32-degree weather to shop. The East Boston resident got one of the few $329 HP laptop and printer packages, saving more than $400.

"It was a good deal on this laptop so it was worth it," said Martinez.

But some shoppers were unimpressed with the bargains. Charlotte Blum of Natick said the savings offered at the Wal-Mart in Framingham didn't seem like such good buys to her, though Wal-Mart advertised six-piece luggage sets for $44 and cotton bath towels for $1.50.

She was tempted to buy a flat screen TV, but held back because she fears a recession.

"Black Friday seems to be for electronic equipment," said Blum, who estimated she would spend around $400 this year on gifts, $200 less than last year.

A Wal-Mart spokesman said the company has a variety of products on sale this weekend.

Analysts say more consumers may take a wait-and-see approach, forcing retailers to make further markdowns. Stores are "going to get exceptionally nervous, and the discounts are going to get even deeper," said NPD's Cohen, who observed Black Friday business at Best Buy, Kmart, Old Navy, KB Toys, JCPenney, Kohl's, and outlet malls between 9 p.m. on Thanksgiving and noon yesterday.

And that's what some shoppers are banking on. Consumers know this will be a buyer's season and will wait for the best promotions to stretch their budgets, according to Pam Goodfellow, a senior analyst at BIGresearch.

"If they don't perceive Black Friday deals to be the best, they simply won't leave their homes this weekend," Goodfellow said. "It's hard to imagine that suffering retailers this year won't compete in December with deep discounts and great promotions. They've done it in past years, and this previous behavior pattern offers shoppers a great incentive to wait to shop and not to crawl out of bed at 3 a.m. the day after Thanksgiving."

Erin Ailsworth of the Globe staff and Globe correspondents Erich Schwartzel and John Dyer contributed this report. Material from the Associated Press was used.