Retailers' bargains bigger as holiday shopping begins

Shoppers looking for things like Harry Potter games and Microsoft's Xbox hit the nation's malls at first light Friday as the Christmas rush began amid tight security and fears this could be the worst holiday shopping season in a decade.

In a scene played out across the country, 300 people lined up outside a Toys R Us store in Little Rock, Ark., before the doors opened at 6 a.m. Among the crowd was Elizabeth Phifer, who was in search of a Diva Starz pet plush dog for her 8-year-old daughter.

"I'm way back here at the end of the line and I'm nervous I'm not going to get it," said Phifer, who was lured in early by a $5 discount on the toy.

Shoppers seemed indifferent to increased security, which was stepped up to put consumers at ease about lingering in public places for fear of more terrorist attacks or anthrax scares. George Briggs didn't seem to notice any extra security at a Lincoln, Neb., mall.

"There's so many people you couldn't pick it out if it was here," Briggs said.

Many shoppers, nervous about job security and political uncertainties, said they plan to pare back their holiday spending.

"Normally I would just buy and buy, but because I don't have a job I'm cutting down," said Gwen Allen, 42, who was shopping in San Diego. "I'm trying to find as many bargains as I can. I've been looking for coupons in the papers and plan on using them."

Deeper discounts

Analysts said there were deeper discounts this Thanksgiving weekend than last year. Many stores, including Sears and KB Toys, as well as mall operators like General Growth Properties, reported a heavier turnout of early morning shoppers than in past years.

Despite the strong showing, Wall Street analysts are nervously watching how the rest of the holiday season will play out. Retailers cut back on inventory in anticipation of slow sales, but fear there will be plenty of leftovers.

Jeff Feiner, managing director of Lehman Brothers, said he expects sales for the 22 major retailers he follows to be up only 2 percent for the holidays. And those gains will be driven by discounting and will come at the expense of profit margins.

The National Retail Federation predicts total holiday retail sales, excluding restaurant and auto sales, will rise 2.5 percent to 3 percent to about $206 billion. If so, that would be the worst retail performance since 1990, when sales were basically unchanged.

Last year, retailers rang up a modest $201 billion, up 3.9 percent from 1999.

E-commerce was expected to post gains, but only a fraction of those registered last year as consumers retrench amid rising job losses and the slumping economy.

At a Wal-Mart in Oklahoma City, Steve Estepp unloaded board games, Barbie accessories and kids' clothes from a packed cart into the back of his pickup truck.

"This is one stop of many," he said, then pointed to his wife Pamela. "We're going wherever she wants to go."