Holiday's first spending up despite worries

Consumers kicked off the holiday shopping season with a frenzy, with the average shopper spending $372.57, up 7.2 percent from a year ago, according to the National Retail Federation. It was an auspicious start at a time when nervous retailers are grappling with the worst economic downturn in decades.

On the first weekend of the holiday shopping season — the Black Friday through Sunday sales period widely seen as a barometer for the rest of the season — 172.9 million consumers braved crowds to buy in stores, made purchases online or bought through catalogs, up 17 percent from a year ago, according to the NRF, an industry trade group. Black Friday, the day after Thanksgiving, is historically the day that retailers become profitable for the year. The Friday typically accounts for 10 percent of total holiday sales, according to the International Council of Shopping Centers.

But history has shown a strong first weekend doesn't always translate into strong sales though the holiday season, says Ellen Davis of the NRF, which is staying with its forecast of relatively weak holiday sales growth this year of 2.2 percent over last year.

Analysts also fear that retailers are driving sales with rock-bottom price promotions — which started in early November this year — that could kill profits and hurt rather than help retailers already struggling to stay afloat.

"Because they're promoting so heavily, it's going to affect their margins," stock analyst Jennifer Black says. "Some retailers will lose money even though their sales are up. The bottom line is that (retailers') bottom lines are shrinking."

The shorter holiday shopping season — 27 days this year instead of 32 last year — also poses a risk to retailers, says David Fry, whose e-commerce company operates the Web sites for retailers including Crate & Barrel and Ann Taylor.

"If you do a sale wrong, under a normal shopping season, you have a week to recover," but retailers don't have that luxury this year, Fry says.

Retailers hope that shoppers' enthusiasm will continue Monday, one of the biggest online shopping days of the holiday season. It was dubbed Cyber Monday by the NRF in 2005, after the group observed a major spike in online sales on the Monday after Thanksgiving as people returned to their office PCs. Retail Web sites began offering special Cyber Monday promotions.