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Sluggish Start To Holiday Sales May Mean More Price Cuts

Despite retailers offering Thanksgiving hours and more online sales, Americans still nervous about the economy spent less this long weekend than they did last year, according to preliminary estimates.

But analysts say retailers will be working harder to boost sales in coming weeks by offering even deeper discounts.

The National Retail Federation reported that spending from Thursday to Sunday fell slightly from last year's peak, when consumers spent a record $59.1 billion. On average, shoppers spent 3.9 percent less than last year — the first dip in spending since 2009.

Stores opening on Thursday didn't seem to diminish the percentage of Americans who shopped on Black Friday — more than 1 in 5 did so — but the percentage of shoppers on Saturday and Sunday were basically cut in half from a year earlier, says Marshal Cohen, chief retail analyst for NPD Group.

The champion of the weekend may have been the Web: Online shopping on Thanksgiving Day and Black Friday grew 19 percent from last year, according to IBM. This may shine favorably on Cyber Monday, when retailers typically offer more promotions online.

But with holiday shopping starting earlier and earlier, Thanksgiving weekend isn't necessarily an indicator of the rest of the season.

"It's hard to compare just these four days — you have to look at the whole season," says Jackie Fernandez, a partner at consulting firm Deloitte who spent Thanksgiving Day talking to shoppers at a mall in Southern California.

Both Deloitte and the National Retail Federation expect holiday sales to increase about 4 percent from 2012's numbers.

The season's success depends partly on the factors outside the retail market, analysts say — everything from gas prices and employment rates to health care costs and security concerns at malls. If the factors are unstable, would-be shoppers are more likely to stay home and save money, says Ron Friedman, retail practice leader at consulting firm Marcum LLP.

"All these factors come into play to make people nervous about buying," Friedman says.

As a result, he says, "if I'm a retailer, I just want to get people in my store."

And that's a good thing for consumers: more sales through December, with deeper discounts than in previous years both in-store and online.

For the rest of the season, price is going to drive traffic, says Cohen.

"Consumers have learned the longer they wait, the better the deals," he says.

Economic uncertainty also means that shopping on Thanksgiving is here to stay. Even without seeing a huge increase in sales overall, retailers can't afford to stay closed, Cohen says. They don't want to lose the customers to another store by being closed.

He predicts that holiday season sales will only expand next year. "Every week, from the weekend before Thanksgiving all the way through Christmas, you're going to have weekend specials," he says.

And even this year, he says, "there will be plenty of Black Fridays to come."

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Source: NPR [http://www.npr.org/2013/12/02/248191775/sluggish-start-to-holiday-sales-may-mean-more-price-cuts?ft=3&f=1003,1004,1007,1013,1014,1017,1019,1128]

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