Local retailers hope for brighter shopping season

Ready for shoppers
The interior of a Target store in Eagan, Minn., entices holiday shoppers on Friday, November 27, 2009.
MPR Photo/Mark Zdechlik

The day after Thanksgiving marks the traditional start of the all-important holiday shopping season. Two huge Minnesota-based retailers -- Target and Best Buy -- are hoping for better business than they saw last year.

Analysts say this holiday shopping season will be "highly promotional," that retailers with the "best value propositions" are likely to attract the most customers.

For consumers, that means stores will be in bare-knuckled price-slashing battles, and the ones that can convince you they've got the best deals are going to get your money.

Retailers will have their work cut out for them, getting some people to open their wallets this year -- people like Dewayne Johnson of West St. Paul, who said he's cutting way back.

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"Oh yes. Big time. As you can see, I don't have much in my hand," said Johnson.

The high unemployment rate is behind fears that sales will be slow.

Johnson, who was at a Best Buy store in Inver Grove Heights, said the bad job market will cast a cloud over his holiday season this year, at least when it comes to presents.

Black Friday shopper
Shopper Evan Kleinwolterink stopped at the Target in Eagan, as well as several other stores, on Friday, November 27, 2009.
MPR Photo/Mark Zdechlik

"We're not doing family gift sharing this year like we normally do," Johnson said. "A lot of the family members are unemployed, so what do you do?"

Johnson, who said he has a job, said the gifts he does buy will be inexpensive necessities.

Fresh off the checkout line at a Target store in Eagan, Evan Kleinwolterink had a different take on holiday spending. He said he plans to spend the same amount this year as last, and he doesn't think he's alone.

Kleinwolterink said judging from the shoppers around him, plenty of people are spending a lot of money.

"It doesn't seem like the economy has slowed down to me because the stores were full," he said. "We were in Wal-Mart, we were in Menards and we were in Kohl's, and they are all packed."

Store manager
Emily Ziebell, a manager at the Target store in Eagan, Minn., said customers were lined up at 3 o'clock Friday morning for the 5 a.m. opening on November 27, 2009.
MPR Photo/Mark Zdechlik

Emily Ziebell, one of the managers of the Target store in Eagan, said customers were lined up at 3 o'clock this morning for the 5 a.m. opening. Ziebell said what people are buying might be different than in years past.

"I think people go for some of the more practical things this year," said Ziebell. "We had $5 pajamas that we sold out within the first 15 minutes we were open."

Holiday sales typically increase in the range of 2 percent to 4 percent each year. Last year they went down by 3 percent. Some analysts are projecting sales this year won't exceed last year's, and might even be lower.

Morning Star equity analyst Kim Picciola said Target will have to aggressively compete with Wal-Mart even just to keep up with last year.

Picciola said despite Target's recent push to convince customers that it has low prices comparable to Wal-Mart, Wal-Mart still has the advantage in a market where people are so concerned about cost.

Economic downturn has major retailers ailing
Best Buy, America's biggest electronics chain, hopes for a better holiday shopping season than last year.
Spencer Platt/Getty Images

"I don't think that the perception is necessarily out there that Target is the most competitive when it comes to price," said Picciola. "I still think Wal-Mart has a leg up when we think about pricing, and perception of whose goods are lower priced."

The holiday sales prospects might be better for Minnesota's other huge national retailer, Best Buy.

Target and Wal-Mart are trying cut into Best Buy's business by selling everything from mobile phones to high definition TVs. But Best Buy no longer has its chief competitor, Circuit City.

David Heupel, with Thrivent Financial for Lutherans, says he thinks Best Buy will see improved holiday sales this year.

"With Circuit City going away, you know they're really the only game in town as it relates to a dedicated, nationwide consumer electronics store," said Heupel.

Bankrupt and unable to find a buyer, Circuit City closed the last of its stores earlier this year.

At the Best Buy in Inver Grove Heights, store manager Carey Caverly seemed delighted with the start of the holiday shopping season.

"The line this morning was almost double the size it was last year," she said.

Despite all of the advertising hype and price wars, this year stores are maintaining tighter inventories so they're not left with piles of unsold merchandise when it's all over.

For shoppers, that means popular items might sell out, and that holding out for lowest price might mean not getting a particular gift at all.