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CNN Live At Daybreak

Discounts More Important With Recession Declaration

Aired November 27, 2001 - 05:27   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DONNA KELLEY, CNN ANCHOR: Most retailers are pleased with the numbers from the big Thanksgiving holiday weekend. Shoppers turned out in droves.

But as CNN's Susan Lisovicz reports, they're demanding and receiving deep discounts.

(BEGIN VIDEOTAPE)

SUSAN LISOVICZ, CNN CORRESPONDENT (voice over): They are an ubiquitous as the big man in the red suit, sale signs, promotions, deep discounts. Amid the festive holiday decor, they are the critical factor in determining whether the holiday season will truly be merry for the nation's retailers.

Hard core bargain hunters lined up in the pre-dawn hours in Detroit on Black Friday. That same mentality in Phoenix helped give Wal-Mart its busiest shopping day ever, ringing up $1.25 billion in sales. And while Telechek said traffic was up 2.4 percent on Friday from a year ago, the RCT National Retail Traffic Index said mall traffic was down eight percent the same day and declined by nearly the same margin the next two days.

ARNOLD KARR, SENIOR EDITOR, "WWD": And by the time all this discounting is done, we think it's going to have a severe effect on fourth quarter earnings. Profitability is, without a question, being affected and it's being affected negatively in all but a very few circumstances.

LISOVICZ: There is some merchandise immune to clearance, like Harry Potter memorabilia, Microsoft's X-Box and Nintendo's Game Cube. Apparel, on the other hand, is vulnerable to further markdowns.

JEFF KLINEFELTER, RETAIL ANALYST: If you want to buy a few more pairs of denim jeans, if you want to buy a couple of sweaters, I think you're going to be able to get those very late in the season as the inventory has been built but has been very slow to sell through.

LISOVICZ: Shoppers are also looking for value on the Web, which saw a 22 percent increase in online shopping Friday compared to the daily average.

SEAN KALDOR, NETRATINGS: In '99, it was the invasion of the dot- coms. In 2000, it was revenge of the brick and mortars. This year it's all about the economy. Whether you're online or offline, it's about getting customers to open their pocketbooks.

LISOVICZ (on camera): Retailers have learned not to read too much into the first few days of holiday sales because consumers increasingly hold off their purchases in hopes of finding better bargains. That may especially be the case this year with the U.S. economy now officially declared in recession.

Susan Lisovicz, CNN Financial News, New York.

(END VIDEOTAPE)

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