US stores cut prices in fight for survival

Today is Black Friday in the US - traditionally the day when shops move out of the red and begin to turn a profit for the first time in the year.

Analysts are highly sceptical that even deep discounts will lure in shoppers this year however, with consumer confidence at a 41-year low.

Black Friday comes the day after Thanksgiving - and the traditional parade through New York staged by Macy's department store - and starts the Christmas shopping season.

It is usually one of the busiest shopping days all year. Traditionally, stores open at 5am and queues of bargain hunters form the night before, some wearing fancy dress. It is usually a jolly, upbeat item for the local TV news.

This year may be different as the world economy lurches into recession and consumers count their pennies.

Ken Murphy, a retail analyst for Standard Life Investments in Boston, said: "People will go out and shop because it's almost a family tradition. They'll just be buying fewer items."

Shops are trying every trick to avert disaster. Some opened at midnight.

But with credit markets frozen and layoffs looming, weaker retailers may find that today is the day they realise they will not survive to Christmas.

Morningstar analyst Brady Lemos said: "We think the numbers are going to be pretty bad across the board."

The plan to slash prices on some items in the hope customers will buy others at full price once in the swing could backfire.

Howard Davidowitz, an investment banker who advises retailers, said: "It's the biggest trade down in retail history. Consumers will cherry-pick deals and go home. It will be all over by the afternoon. Retailers will be in terrible shape from a margin point of view."

Critics say there are too many stores for the present economic environment and too many have false hope about how tough the next few weeks will be.

Last year, the Thanksgiving shopping weekend of Friday through to Sunday accounted for about 10% of overall holiday sales, according to ShopperTrak RCT Corp.

Britt Beemer, chairman of America's Research Group, expects a surge of shoppers for early morning deals but predicts crowds will taper off throughout the day and into the weekend.

"I think we are going to see the busiest Black Friday ever, but will it carry over past 10am?" he said. "The bottom line is a great Black Friday does not make a season."