Shoppers start holiday marathon

Shoppers start holiday marathon Black Friday crowds spend an estimated $20 billion.

The big question for the economy: Will they keep buying?
By Parija B. Kavilanz, CNNMoney.com senior writer
November 23 2007: 2:20 PM EST

NEW YORK (CNNMoney.com) -- Worried retailers and mall operators breathed a sigh of relief after the 2007 holiday shopping marathon off to a robust start Friday.

According to the first early sales estimate, MasterCard Advisors retail analyst Michael McNamara expects Black Friday sales to hit $20 billion. MasterCard Advisors tracks spending made on credit and debit cards as well as cash and check transactions.

McNamara said the estimate represents 5 percent of total expected holiday sales and slightly outpaces last year's Black Friday sales of $19.1 billion.

However, some industry analysts caution that the early buying frenzy could soon peter out - and endanger crucial weekend sales - as millions of pre-dawn shoppers succumb to shopping fatigue.

"The early bird shoppers are definitely out there. But will it last through the day?" said Marshal Cohen, chief industry analyst with market research firm NPD Group.

Already, Cohen estimates that mall traffic in the early hours appeared to be down slightly compared last year.

"I'm basing this on mall parking lot capacity and the actual lines in front of stores before they opened today," Cohen said. "Last year there were 200 to 300 people waiting for stores to open on Black Friday. This year, it's maybe 100. And when these 100 people get in, that's it. I'm not seeing a second big rush into the store."

To his point, a Wal-Mart (Charts, Fortune 500) store in Union, N.J., seemed to attract a smaller crowd than last year for its 5 a.m. opening. The shoppers who came out rushed to grab toys such as the Bratz fashion dolls and Dora products and electronics like the Polaroid 42-inch LCD TV set for $798 and a Magnavox DVD/VHS player for $69.

"[Today] will be an OK sales day, but the big issue is whether or not we'll get a slowdown midday," said Cohen. "I'm waiting to see how sales do today and the weekend. All three days are important, although I think Sunday will be much quieter than last year."

The day after Thanksgiving is dubbed Black Friday because it traditionally marks the day when retailers finally move out of the red, indicating losses, and into the black, representing profit.

It also sets the tone to the four weeks of gift-buying leading up to Christmas. Moreover, November and December, together, can account for as much as 50 percent of merchants' annual profits and sales.

This year's Black Friday rush is even more critical for retailers, who are facing a tepid sales forecast for holiday 2007. The National Retail Federation expects total holiday sales to grow 4 percent to $475 billion, its slowest growth in five years as millions of American households curtail their spending habits amid a housing downturn and other economic pressures.

If holiday sales come in below 4 percent, experts fear it could result in a retail industry shakeout marked by store closings in 2008.

"Retailers still haven't felt the full impact of the housing slump, sub-prime [mortgage] collapse, credit card problems and fuel prices on American households and their ability to spend," said Tim Finley, former CEO of men's specialty chain Jos. A Bank who is now managing director with turnaround consulting firm Alvarez & Marsal.

Retail analyst Britt Beemer said he, too, expects the shopping momentum to wane by mid-afternoon and in the coming weeks.