Shoppers browse stores, buy online as Black Friday deals beckon

CHICAGO/NEW YORK (Reuters) - Deep discounts, free gifts, in-store entertainment and mild weather drew bargain hunters to U.S. stores on Black Friday, the traditional start of the holiday shopping season, but many shoppers were just eyeing goods, reserving their cash for online purchases.

Early sales results that also included online demand looked rosy, sending shares in many retailers higher. Stores had also carefully managed their inventory, hoping to ward off any post-holiday liquidation that would weigh on profits.

There were few signs of the over-the-top frenzy that had been a hallmark of the start to the crucial U.S. shopping season in years past, and some stores appeared to be getting creative with gimmicks beyond heavy discounts.

But the muted store traffic did not portend a weak holiday season, analysts and industry executives said.

The day after Thanksgiving is traditionally when retailers offer “doorbuster” deals attracting bargain hunters. Many department and big-box stores have said they will compete fiercely on price this quarter while keeping inventory lean.

Black Friday sales were off to a strong start online, at $640 million of 10 a.m. ET (1500 GMT), according to Adobe Analytics, up 18.4 percent from a year ago. On Thanksgiving Day, U.S. shoppers spent more than $2.87 billion online.

Adobe forecast online Black Friday sales of $5 billion, which would be a record high. Online retailers will rake in an additional $6.6 billion on Cyber Monday, Adobe said.

Macy’s Inc and JC Penney Co are doing well because of the way they have ordered and managed inventory this time, according to Burt Flickinger, managing director of Strategic Resources Group, a consultancy with seven researchers out in the field.

“The turnout this morning has been relatively slow but it is still the best we have seen in three years. We expect it to pick up as the day progresses,” Flickinger said, citing improving consumer confidence, a strong job market and healthy housing prices.

“Our stock, our inventory was just right,” said Martin Napoleon, general manager of JC Penney at North Riverside Mall in Chicago.

Some early shoppers were lured by the promise of spectacle, while others felt the pull of nostalgia.

“It’s like a hangout, it’s an experience,” said Jonathan Lin, 17. “All my friends are back from college and we got together.”

”There’s something nostalgic about being at the stores this early,” Jennifer Stasiak, an early shopper at Chicago’s popular Oakbrook Center said.

Miguel Flores, 43, an overnight security guard, visited a Target in Manhattan after his shift ended.

“I mostly shop online but decided to drop in because I haven’t been to a store in a long time,” Flores said.

Tenesha Robertson, 43, a loader at UPS, exited Macy’s in Jersey City’s Newport Centre Mall with her mother, daughter and several large bags in tow. They were headed to drop items off at Robertson’s car before buying more at the mall.

“We go to Macy’s every year,” she said. The discounts are about the same, but we like to come just to be here for the family time.”

Macy’s Chief Executive Jeff Gennette told CNBC on Friday that the retailer was better off this year than last, had robust online demand and was in a good place for holiday promotions, sending the retailer’s shares up more than 4 percent.

“We had a good start to the fourth quarter,” Gennette said. “Black Friday was very strong online, as well as the traffic that came into our stores last night and that are here today.”

JC Penney climbed 1.8 percent and Wal-Mart Stores Inc edged higher.

Target Corp did not fare as well, with analysts noting that it closed its stores for several hours overnight even while many rivals kept their doors open. Its shares fell 2.4 percent.

NOT WHAT IT USED TO BE

The period between the U.S. Thanksgiving holiday and Christmas can make or a break a retailer, accounting for as much as 40 percent of total revenue for the year.

More people picked up deals online and the traditional Black Friday rush was split by stores opening the night before.

Godiva gave out free chocolates, Sephora offered face masks and perfumes. Dancers entertained Bergdorf Goodman shoppers, according to the New York Post.

The deepest Black Friday discounts included more than $200 off some Best Buy TVs, all bras across Victoria’s Secret Pink stores for $25, half-price video games at Target, and $50 off PlayStation 4 Pro gaming consoles at Wal-Mart.

In Pearland, Texas, a suburb of Houston, Derrell Felix, 56, wearing a scarf and gloves, waited outside a Best Buy for doors to open. She had her eye on a Sharp 50-inch LED flat screen TV for $179, a significant mark down from its original price of $499.

“I know they only have 20 of them in there so I’m hoping they have some left by the time I get in,” she said.

The challenge for retailers will be to convert early spending into spending throughout the season and to go beyond deep discounts, NPD Group Chief Industry Analyst Marshal Cohen said in a note.

There were some signs on Thursday night of the chaos that Black Friday is traditionally known for.

The Riverchase Galleria in Hoover, Alabama, outside Birmingham, said police had to be called to break up a fight at between two women who might have been trying to get the same sale item in a store. The mall shut about 15 minutes early.

Enticing shoppers with Black Friday deals is especially important for brick-and-mortar retailers given the continued switch to online shopping, led by Amazon.com Inc, which has forced chains such as Toys R Us, apparel retailers True Religion, The Limited, Rue 21 and off-price retailer Payless Shoe Source to file for bankruptcy this year.

Despite explosive growth in online shopping, traditional retailers still earn the bulk of their revenue from in-store buys. Shoppers in brick-and-mortar stores can also be easier to tempt with impulse or add-on purchases than online browsers.

THURSDAY NIGHT, CYBER MONDAY

Amazon began touting its sales for Cyber Monday, one of the biggest days for online shopping, on Friday and said shoppers using its digital assistant Alexa could score deals on Sunday.

Wal-Mart, Target, Macy‘s, JC Penney and other retailers opened their stores on Thursday evening and most have been offering extended deals online starting as early as October. Some started offering in-store deals earlier this week.

Garden State Plaza in Paramus, New Jersey, was crowded but not chaotic. Shoppers came for deals with nothing specific in mind.

Many enjoyed the experience of trying on clothes rather than shopping online.

“It looks a little slower this year,” Build-A-Bear employee Marissa Trujillo said.

“Black Friday isn’t what it used to be because stores are extending their sales into the weekend and you can shop online,” said Unmesh Patel, 30, a project manager. “I also come for the rush even though it lessens every year.”

A Macy’s employee at the mall said it was less busy on Friday because the store had been open, and packed, on Thursday.

“They’re all online,” said Sarah Jones, 42, an employee at Roosevelt Field Mall on Long Island. “I’ve worked in retail my whole life, trust me.”