Retailers see strong holiday start

NEW YORK - After what appeared to be a strong start to 2007 holiday shopping, retailers are hoping customers will keep buying in a season some forecasters say will be the weakest in five years.

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Shoppers had been pulling back in recent months amid a challenging economy, and the big worry is that after the big spending spree this past weekend, they will retreat and return to malls only for last-minute shopping.

Stores and malls attracted bigger-than-expected crowds as early as midnight for discounted flat-panel TVs, digital cameras and toys on Friday. Strong sales continued through Saturday, according to a research group that tracks total sales at retail outlets across the country.

The biggest draw was electronics, benefiting consumer electronics chains like Best Buy Co. and discounters such as Wal-Mart Stores Inc. and Target Corp. Popular-priced department stores including J.C. Penney Co. and Kohl's Corp. drew in crowds with deals. Toy stores like Toys "R" Us Inc. fared well too. Still, apparel sales appeared to be mixed at mall-based clothing stores, though a cold weather snap helped spur sales of outerwear and other winter-related items.

"This was a really good start. ... There seemed to be a lot of pent-up demand," said Bill Martin, co-founder of ShopperTrak RCT Corp., which tracks total sales at more than 50,000 retail outlets. ShopperTrak reported Sunday that sales on Friday and Saturday combined rose 7.2 percent to $16.4 billion from the same two-day period a year ago.

Total sales on Friday, the day after Thanksgiving, rose 8.3 percent to $10.3 billion from the same day a year ago. Martin had expected increases no greater than 5 percent for Friday.

But Frederick Crawford, managing director at AlixPartners, a turnaround consultant, said people are buying more selectively this season.

"People had their list, and they were very specific in what they were looking for," he said.

According to a survey of about 2,400 shoppers conducted by the National Retail Federation, the amount of money that consumers spent on average on gifts this past weekend slipped to $347.44, down 3.5 percent from last year. Retailers made up for the lower average expenditures with increased traffic.

Consumers were looking for bargains.

"The bargains are better this year, a lot better," said Theresa Calib of Houston, who was at the local Greenspoint mall Saturday. "We always know what we want to get, and we get it." She bought two pairs of shoes at Foot Locker Inc.'s two for $89 sale.

"I'm trying to get everything done, and I did it," said Pat Marcantonio, of Wakefield, R.I., who returned Saturday to the Warwick Mall after braving the crowds Friday morning.

Many retailers, including Sears Holdings Corp., discounted products like electronics that they knew shoppers wanted. Analysts say frustrations were high among shoppers who couldn't get their hands on limited deals at many stores.

Janet Kim, 18, of Fairfax, Va., came out Friday to purchase a stereo for her iPod that usually retails at $150 but was on sale for $60. Kim said she first went to a Best Buy outlet store in Leesburg, Va., about 3 a.m. but found large crowds following that store's midnight opening.

"The line was too long and we couldn't even get parking," she said.

Sears Holdings spokeswoman Gail Lavielle said shopper turnout Friday was better than a year ago, and customer flow was steady throughout the weekend. Both Kmart and Sears sold a significant inventory of flat-panel TVs. Other hot items were Global Positioning System receivers, game consoles like the hard-to-find Nintendo Wii, and digital cameras.

Toys "R" Us chairman and CEO Jerry Storch said the toy seller drew a strong turnout Friday for its 101 early morning specials and was pleased with traffic on Saturday and Sunday.

Popular items included anything related to The Walt Disney Co.'s hot franchises "Hannah Montana" and "High School Musical," video games and consoles, an interactive parrot from Hasbro Inc., and radio-controlled helicopters and planes.

J.C. Penney reported a "strong performance across all merchandise categories," including fine jewelry, outerwear and young men's and children's assortments.

Meanwhile, comScore Inc., an Internet research company, reported a 22 percent rise in online sales on the day after Thanksgiving versus a year ago.

But some shoppers are cutting back.

John Muller of Clifton, N.J., who was standing outside Macy's Herald Square in New York city on Sunday, estimates he'll spend about $500 this year, half as much as a year ago, because of higher expenses and worries about the economy.

"We are mostly buying for the kids," said Muller, who has two children, ages 3 and 7.

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AP Business Writer John Porretto in Houston, AP photographer Jacquelyn Martin in Washington, D.C., and Associated Press writers Brent Kallestad in Tallahassee, Fla., Michael Felberbaum in Richmond, Va., and Kathy Matheson in Philadelphia contributed to this report