Black Friday comes early as stores try to lure wary spenders

Gearing up for door-busting deals the day after Thanksgiving? They're already here.

The annual cat-and-mouse game between retailers and shoppers over holiday deals has gotten off to a historically early start this season, with many merchants slashing prices earlier and deeper on everything from Christmas decorations to winter coats.

"We're seeing sales now that should be happening after Thanksgiving -- not two or three weeks before Black Friday," said Dan de Grandpre, CEO of the bargain-hunting site dealnews.com, referring to the post-Thanksgiving start of the holiday shopping season.

"It's bad for stores, but good for consumers to see all this activity."

Wal-Mart began discounting Christmas toys in September, while L.L. Bean started offering free shipping.

Kohl's, Herberger's and J.C. Penney rolled out the 50 percent-off signs before Veterans Day. Door-busting sales and extended-hours gimmicks associated with Black Friday have been going on for weeks.

Despite that, consumers worried about the economy have held off spending. A tanking housing market, the rising costs of basic goods, record personal debt loads, and more expensive credit all are creating what some have described as a financial tsunami for consumers.

Retail pundits predict the slowest holiday sales growth in five years.

"This year, I will not go over my budget, like I've always done," said Karen Zierath, of Marion, Iowa, who was enjoying an annual four-generation shopping trip to Edina's Southdale mall last week with her mother, daughter and granddaughter. "Each child gets x-amount and each adult gets x-amount," Zierath said. "When that's gone, that's it."

In Minnesota, the average price of a gallon of regular gas is 40 percent more than it was a year ago, according to AAA. Eggs are up 45 percent, while milk and other dairy products are 15 percent higher, says agricultural economist Corinne Alexander of Purdue University.

Even Starbucks isn't immune. Store traffic declined for the first time, the company reported Thursday.

Luring them in

When consumers worry about everything from their jobs to the cost of coffee, retailers know times are tough. To entice shoppers, they usually have to drop prices, get clever or both.

"We're seeing a lot of people saying, 'I'm going to wait until the week before Christmas and see how much lower the stores are going to go,'" said Britt Beemer of America's Research Group.

Take Anita Lang of Orono. "I'm one of those who'll wait until the last minute," she said. "To me, this is too early."

Already, retailers have spent 12 percent more on circular promotions than a year ago, according to ShopLocal, a company that tracks marketing trends.

Industry experts envision an hourglass effect, with strong sales at low- and high-end retailers, such as Wal-Mart and Saks, while the vast middle remains challenged. In tough times, people "spend down," said economist Michael Niemira of the International Council of Shopping Centers, bringing higher-income earners into deep-discount stores.

Minneapolis-based Target, criticized by some analysts for being too timid, is trying something new this year. Instead of broad discounts, the retailer will put 20 items on sale the week after Thanksgiving. Customers who use their Target credit cards to buy those products will be registered in a sweepstakes that could land them in a Masarati Italian sports car or on an African safari, among other prizes.

"It's a nice kick-off," said Patricia Edwards a portfolio manager for Wentworth, Hauser and Violich in Seattle. "But I expect whiz-bang from Target. So far I haven't seen it."

Retailers' panic

Retailers draw up calculated sales plans months in advance. But sometimes panic sets in when sales go soft and competitors start using deals effectively to bring in customers.

"It becomes this frenzy retailers go through," said David Brennan, co-director of the Institute for Retailing Excellence at the University of St. Thomas. "If I'm not out there and I'm not cutting, I'll lose my sales."

Best Buy fell victim to that last year when everyone from Ace Hardware to Home Depot forced the Richfield-based retailer to slash prices to match them on a wide range of consumer electronics. The move ultimately resulted in lower-than-expected profits.

This year, Best Buy is pushing customer support on top of rock-bottom prices on select items. The key word, executives say now: "select." Think computers and flat-panel televisions. Maybe a GPS navigational system for your car, but sales probably won't linger for an extended time.

And don't expect widespread deals on items such as the Nintendo Wii, Microsoft Xbox or anything in the iPod family. Such high-margin, hot-ticket items won't get deep discounts, analysts predict.

Edwards noted that retailers saw the unraveling of the housing market in July, and stocked accordingly. That could mean less panic-driven price cuts if items don't sell.

Nonetheless, nearly three-quarters of major retail marketing executives predict more discounting this year than last, according to consultant BDO Seidman. Expect to find good deals on clothing, especially winter coats and outerwear.

"What would Christmas be without someone selling a $40 cashmere sweater?" Edwards said.

Jackie Crosby • 612-673-7335

Jackie Crosby • jcrosby@startribune.com