Friday, November 25, 2005

Early Holiday Shoppers Hunt for Bargains

Hundreds of shoppers wait in line for a Wal-Mart store to open Friday, Nov. 25, 2005, in Northlake, Ill. Shoppers waited in line for hours for the 5 a.m. opening of the store on the first day of the holiday shopping season. (AP Photo/Brian Kersey)

This is from Yahoo News:

NEW YORK - Bargain shoppers, many facing frigid temperatures, woke up before dawn Friday to snap up specials on items from cashmere sweaters to flat-screen TVs and digital music players as the holiday shopping season officially got under way.

Things got out of hand at a Wal-Mart store in Orlando, Fla., where a man who allegedly cut in line to get a discounted laptop computer was wrestled to the ground, according to a video shown by an ABC affiliate, WFTV-TV. The store's manager referred questions to Wal-Mart Stores Inc. headquarters in Bentonville, Ark., where officials had no immediate comment.

[See video here from WFTV-TV]

In an improving but still challenging economy, merchants seemed to be even more aggressive in wooing the big crowds from a year ago, luring them with such come-ons as free money in the form of gift cards. For the first time, Macy's, a division of Federated Department Stores Inc., was giving away a total of $1 million in gift cards to early bird shoppers. Some retailers, like J.C. Penney Co. Inc. and Wal-Mart, threw open their doors earlier in a bid to keep them shopping longer in their stores.

Such incentives may have worked. Based on early reports from some retail executives, traffic and buying appeared more robust than last year, but stores need customers to keep buying throughout the season.

"To me, it looks like more traffic than what we have seen," said Terry Lundgren, chairman, president and CEO of Federated, who was walking the floors of Macy's Herald Square in New York, which attracted 1,000 customers to its doors for the 6 a.m. opening. "I have also seen a lot of bags." Hot items were cashmere sweaters, down comforters and scarves, at up to 60 percent off, he said.

"Today, things look really good. But these next five weeks are really critical," Lundgren added. "You have to wait and see how it unfolds."

Shoppers fill the aisles of a Wal-Mart in South Setauket, N.Y., shortly after the store opened at 5 a.m., Friday, Nov. 25, 2005. The nation's retailers are set to usher in the 2005 holiday shopping season with the usual come-ons_deep discounts and expanded hours_ along with a slew of stores offering early bird specials for the first time. (AP Photo/Ed Betz)

At a Best Buy Co. Inc. store at CambridgeSide Galleria, in Cambridge, Mass., the line of about 400 shoppers snaked through the indoor mall for the 5 a.m. store opening, a scene that was played out across the country.

"The prices are much better than last year," said Shirley Xie, 30, who was with Jen Lin, 35, both from Medford, Mass. The married couple said they were enticed by deals such as a Toshiba Corp. laptop computer, with a 15-inch screen, that was $379.99 after a $370 instant rebate. The offer ended at noon Friday. Xie said a comparable laptop she bought last year as a gift cost about $600. The couple bought a pair of the computers as gifts for a niece and nephew entering college.

The couple also bought a SanDisk Corp. MP3 player for $39.99 after a $60 instant rebate available until noon.

At a Wal-Mart store in Strongsville, a suburb of Cleveland, Ohio, the biggest crowds for the 5 a.m. opening were in the electronics aisles. Portable DVD players were selling for $79.86; 20-inch flat screen TVs, advertised for $129.83, were selling for $89; and the Garth Brooks limited-edition, six-disc box set was priced at $25.

Tosha Peterson and Brad Farrer sleep outside the Wal-Mart store Friday, Nov. 25, 2005, in Midvale, Utah. They and their friends got in line seven hours prior to the store's opening. All of them got the $398 laptop computers they came for. (AP Photo/Douglas C. Pizac)

This is crazy. Spending Thanksgiving night just to get to that first Christmas shopping day for buying presents--with the stores just happy to open their doors at 5 a.m. in the morning. Five A.M. in the morning? Who gets up that early anymore?

We use to have three distinct holidays for the last three months of the year. The first, of course, was Halloween. Kids would get dressed up to go trick-or-treating for candy. The adults would get dressed up for their own parties. Then the merchants decided to commercialize Halloween--just go to one of the Halloween superstores that pop up during October, and you'll see just about every costume, mask, and decorative items to make your place a haunted house for your wild Halloween party-night for either kids or adults.

Then there was Thanksgiving. Thanksgiving was the middle holiday that really didn't do much for retailers. Look at what you do on Thanksgiving--you get together with your close friends and family, stuff yourselves full of turkey and cranberry sauce, then sit around like beached whales, ready for nap time. Not much commercialism there, except for the two people who might just buy the paper mache turkey centerpieces for their dining room tables. The only items consumers were buying for Thanksgiving were the turkey dinners. So what do the retailers do? They co-opt Thanksgiving, and start putting out the Christmas decorations. Go into a department store on November 1st, and you'll start hearing the Christmas carols interspaced with the crappy elevator music they'll play. The decorations are already starting to go up. Now we have this big after-Thanksgiving sale, or pre-Christmas sale, where the stores are opening up to entice shoppers to start spending their money. Time to max out those credit cards on $40 throw-away DVD players, and $300 laptops.

There's only two holidays for retailers--Christmas and Halloween. Halloween is the honorable mention holiday here. I won't even get started on Christmas.

And yet, I wonder if the retailers are going to shoot themselves in their feet this year. Continuing with the Yahoo story:

Retailers' spirits have improved in recent weeks amid falling gasoline prices. In fact, on Tuesday the Washington, D.C.-based National Retail Federation upgraded its holiday growth forecast to 6 percent from the 5 percent it had announced back in September.

Still, many shoppers are cautious. While gasoline prices have fallen, they are still high, and this winter shoppers will face higher heating bills.

Shelley Humback, 30, of Strongsville, Ohio, who was shopping at a local Wal-Mart, said she plans to spend about $1,000 this year on Christmas gifts, half of what she spent last year.

"Everything's up, including the price of gas. I have to pay to heat my home," she said.

The retailers are hoping for bigger Christmas sales growth this year than last. They are trying to get their spirits up with the recently falling gas prices--maybe consumers will start spending more money this year. But I'm wondering if the retailers are not looking at the entire picture here--perhaps they don't realize that home heating bills are also going up, or that economic growth is not translating into higher wages for workers, or a better jobs picture. Remember, GM just announce layoffs of 30,000 last week. And in todays Yahoo News Business section are two stories regarding higher energy prices. The first is a general story regarding higher heating costs througout the world:

Heating oil and other energy prices are up to 40 percent higher than three years ago. That translates into bad news for Northern Hemisphere consumers whose budget is already stretched by a summer of high prices at the gasoline pumps — and into opportunities for those who cash in on the cold.

In South Korea, where a vigorous save-energy campaign is under way, the clothing industry expects a 10 percent rise in profits from sales of warm apparel. But not only manufacturers see an opportunity.

"We have seen a lot of thefts of heating oil ... stolen from private properties and construction sites," says Peter Josephsen, a police officer in Ringkoebing, 140 miles west of Copenhagen.

Henrik Sloth, who sells wood-burning stoves and fireplaces in Roskilde, also west of the Danish capital, says sales are "smoking hot." And Denise Henry, whose family deals in firewood in France's Bourgogne region, says "the phone is ringing off the hook."

The second story regards a possible natural gas shortage in New England:

PROVIDENCE, R.I. - In just a few short years, New England may run short of natural gas. Energy analysts predict that by 2010, and perhaps sooner, there won't be enough supply to fulfill the region's energy needs. But plans to build liquefied natural gas terminals in New England face stiff opposition.

Opponents say highly flammable LNG is too risky to store in heavily populated areas, and security measures to protect tankers that bring in LNG shipments will be a burden. Some have proposed putting terminals offshore, but those plans concern fishermen and environmentalists.

Long reliant on heating oil due to its older housing stock, New England came late to the natural gas market compared to the rest of the country. Thirty-five percent of households in New England use natural gas, the lowest percentage among all regions of the country, according to the U.S. Energy Information Administration. Fifty-five percent of U.S. households heat with natural gas, according to the agency.

Natural gas demand in New England is expected to grow 1.4 percent annually on average through 2025, according to the EIA; that translates into a 35 percent increase in usage during that time.

While that level of growth may not seem extraordinary, the key is its effect during so-called peak days, when demand is highest and the system is strained. Experts say supply is stretched thin even now during peak periods, because the main and secondary pipelines operate at capacity. As recently as January 2004, the region endured a gas crunch when high demand put unexpected pressure on the infrastructure and caused prices to spike.

Also, New England is at the end of the pipeline network and has no underground storage capacity, which can make it especially susceptible to weather problems or disruptions.

"We're close to capacity at peak days, and if that is affected by something we haven't planned for, then that's a cause for real concern," said John Shea, director of environment and energy programs at the New England Governors Conference.

So I wouldn't get my hopes up too high for Christmas shopping. I know I'm cutting way back on my Christmas shopping for this year.

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