A focus on bargains pulled U.S. shoppers into stores and onto websites over the Thanksgiving holiday weekend, but many said they would stick to their budgets and avoid purchases if they couldn't find a good deal.
Shoppers turned out in force on Black Friday, the day after U.S. Thanksgiving, and returned on Saturday for more.
Industry executives and analysts have predicted a tough holiday season that may only show a slight improvement over 2008, when retailers logged their worst performance in nearly four decades due to a weak economy and high unemployment.
This will be the hardest holiday season ever to predict, said Eric Karson, associate professor of marketing at Villanova University's School of Business. We have this big game of chicken now evolving between the retailers and the customers.
While retailers used to offer steep promotions on select items as the initial lure to shoppers, in the hopes they would buy more inside the store, consumers now expect the discounts as a matter of course.
The whole idea of the loss leader getting people into the store to buy other things may not work as well as it has in the past, Karson said.
Claude Smith, a 45-year-old, out-of-work plumber from Virginia, said he was trying to pay off his credit card, which now has a higher interest rate. He now pays with cash when he visits stores such as TJX Cos's AJ Wright, Syms, Walmart and Sam's Club.
Things are bad. Everybody's thinking about saving everything they have. I go out when there's sales and that's it, said Smith, who visited the Galleria at White Plains mall in New York with his two teenagers on Saturday.
Wall Street is getting better, but the average New Yorker is still feeling it. With unemployment, I make enough to survive. As soon as I start working it'll get better.
EARLY COUNT SHOWS MORE SHOPPING
Shawn Kravetz, president of hedge fund operator Esplanade Capital LLC, said retailers that slashed costs would do well.
You can count companies with positive comps on two hands -- J Crew, Wal-Mart, Chico's and few others. That is not a strong holiday, he said. The Pricebusters and other promotions should be called 'Marginbusters.'
Based on early data from the weekend, which could set the tone for the holiday season, retailers don't have to panic about prices, they don't have to panic about inventory, said Marshal Cohen, senior analyst at retail consultancy NPD Group.
More shoppers appeared to be buying than they did in 2008. The number of consumers with shopping bags rose to 60 percent on Black Friday from 48 percent last year, Cohen said. By midday on Saturday, 35 percent to 38 percent of shoppers were carrying bags, up from just 24 percent in 2008, he said.
Saturday usually has a good start early and fizzles out by almost noontime, but so far it looks like the traffic is going to hold up even longer, Cohen said while surveying an outlet mall. Sunday usually is pretty quiet, so if tomorrow is busy at all that's a really big plus for the retailers.
Many shoppers showed they were relying on lessons learned from the 2008 season, which began just after a global financial crisis erupted. An unemployment rate above 10 percent and other financial pressures also weighed on their minds.
I have three children. I am a single mom. The economy is bad. I am getting only those things that we really need, said Natasha Walker, a 35-year-old telephone operator, whose purchases included a GPS navigation system for her car, CD holders, movies for her children and clothing for herself.
ONLINE SALES JUMP
More shoppers spent time online at the start of the 2009 holiday season.
They spent 35 percent more on Black Friday web purchases than a year earlier, with the average order value reaching $170.19, according to online retail analytics company Coremetrics. Those shoppers bought an average of 5.4 items per order, up from 4.6 items last year, Coremetrics said.
Shoppers also took a break from holiday festivities and went online on Thanksgiving.
Wal-Mart Stores Inc's site Walmart.com was the most popular retail site on Thanksgiving for the fifth year in a row, followed by Amazon.com Inc and Best Buy Inc, according to tracking firm Hitwise.
Online sales are growing, but they still account for less than 4 percent of total retail sales, Karson said.
Now that the Black Friday rush has passed, retailers are not letting Saturday's potential for shoppers pass them by.
Kohl's Corp, whose website shut down for a bit on Friday, advertised Christmas Super Saturday sales on its website and in stores.
Meanwhile, Wal-Mart hoped to lure shoppers with limited quantities of Samsung HDTVs. Wal-Mart also plans to host exclusive viewings of footage from Miley Cyrus's Wonder World Tour on Saturday afternoon, and said fans at some stores would get free pizza.
(Reporting by Jessica Wohl, additional reporting by Nicole Maestri in San Francisco, and Jennifer Ablan, Martinne Geller and Dhanya Skariachan in New York)