Best Buy Gets it Right, an Early Holiday Winner

Having the right products at the right price at the right time helped make Best Buy Co Inc one of the early winners in what was a record start for U.S. retailers to the holiday shopping season.

The electronics retailer, which was one of the biggest losers in 2010, drew in shoppers by being one of the companies that opened its stores at midnight Thanksgiving night, and unlike in 2010, it focused more on having lower prices for big TVs and other popular items.

"Last year, they weren't as responsive with their pricing as they needed to be. We are seeing a different set of behaviors from them this time around," Lawrence Creatura, a portfolio manager at Federated Clover Investment Advisors, said.

Overall, shoppers will have spent a record $52.4 billion, up 16.4 percent from 2010, from Thursday through Sunday, according to a survey for the National Retail Federation, conducted by online research firm BIGresearch. .

Many retailers opened at midnight or earlier on Thanksgiving, pulling in younger people who were willing to stay up late for deals on electronics and toys instead of getting up before dawn on Friday.

"Consumers have finite cash. If you can be the retailer who gets that cash first, you are likely to be more successful in the holiday selling season," Creatura said.

Aside from Best Buy, analysts and investors also named Macy's Inc and Wal-Mart Stores Inc among those that were strong starters.

"Best Buy's success is partially due to locking in compelling exclusive deals, better than Amazon's, and having unique in-store-only offers forcing the visit," Credit Suisse analyst Gary Balter said.

Lee Johnson, 46, shopping at a mall in El Segundo, California, bought a computer at Best Buy on Sunday.

He said online shopping is usually a better idea, but he needed the computer for an employee who is starting tomorrow.

"I just didn't have time."

Fifty million Americans visited online retail sites on Black Friday, representing an increase of 35 percent versus a year ago, and online retail sales in the United States on Black Friday jumped 26 percent this year, comScore data showed. [ID:nN1E7AQ03X]

Each of the top five retail websites saw double-digit gains in visitors versus last year, led by Amazon.com. Wal-Mart ranked second, followed by Best Buy, Target and Apple , comScore said.

"Amazon.com once again led the pack, with 50 percent more visitors than any other retailer, while also showing the highest growth rate versus last year," comScore Chairman Gian Fulgoni said.

Amazon has used "every method at hand, old and new to promote their business this holiday season so far," WSL Strategic Retail CEO Wendy Liebmann said, referring to the online chains promotions in print, online and circulars.

About 122.9 million Americans plan to shop on Cyber Monday this year, up from the 106.9 million who shopped on Cyber Monday in 2010, NRF vice president Ellen Davis said on Sunday, citing a survey conducted by BIGresearch.

POTENTIAL LOSERS

Retailers that opened late or held the line on promotions failed to impress.

"Office supply seemed among the least busy as they opened later and had fewer high-profile deals than in years past," Balter said.

Retailers Gap Inc and Sears also "need to step up," Craig Johnson, president of consulting firm Customer Growth Partners said, adding that he worries the two chains may be too late already as the "horse is out of the barn."

"We would be most cautious on Sears due to their cash flow and serious appliance competition," Balter said.

The holiday shopping season that traditionally kicks off on Black Friday -- the biggest day of the year for retailers -- is closely watched by investors as consumer spending accounts for about 70 percent of the U.S. economy.

The National Retail Federation, an industry trade group, forecast a 2.8 percent increase in sales for the November-to-December holiday season, down from the 5.2 percent increase in 2010.

Despite the strong start, many remain skeptical if retailers will be able to maintain the sales momentum seen this weekend.

"One swallow does not a holiday season make. After the deepest recession in decades, the solid Black Friday weekend is welcome news, but we're only in the second quarter of a long playoff game," Johnson said. (Reporting by Dhanya Skariachan in New York, Alistair Barr in San Francisco and Lisa Baertlein in Los Angeles; Editing by Brad Dorfman, Maureen Bavdek and Diane Craft)