A Fast Start for Holiday Retail

Black Friday sales were solid, even if Fisher Price's Elmo, Sony's PS3 and Nintendo's Wii were nearly impossible to find at many stores

by Pallavi Gogoi

Elmo TMX? Gone.

PlayStation 3 and Nintendo Wii? Sold out.

Overall, sales on the kickoff weekend to the holiday shopping season were strong, but shortages of this year's hottest items left many shoppers disappointed and ended up hurting those retailers without something special to lure customers.

Steep discounts and extra-early openings on Black Friday led to robust sales at many retailers, with sales up 6% to $8.96 billion, according to preliminary estimates by ShopperTrak, which tracks retail sales at 45,000 stores in malls. "This data shows an even larger increase than expected as consumers proved they were willing to spend," said Bill Martin, co-founder of ShopperTrak.

"People Don't Have Access"

But several retailers were left out of the celebration. Wal-Mart (WMT), the world's largest retailer, expects same-store sales for November will decline 0.1%, its first monthly sales decline in 10 years. Shoppers were disappointed that some stores were sold out of the gifts they most wanted, such as the new Elmo TMX and the PlayStation 3. "People don't have access to two of the top gifts of the season—it's like the story of the Grinch," says Patricia Pao, founder of retail consultant The Pao Principle in New York. "Scarcity of products make them valuable, so manufacturers made very few of these items to create demand."

Empty store shelves are everywhere. The Elmo TMX, or "Tickle-Me Extreme" Elmo, a 10th anniversary edition from Mattel's (MAT) Fisher Price division, is sold out at practically every retailer, from Toys "R" Us to Wal-Mart. Pao believes that Fisher Price purposely released only a third of the anticipated demand to create buzz around the launch. Fisher Price says the shortage was not self-induced. Rather, Fisher Price President Neil Friedman says, "We had high hopes and Elmo has exceeded our expectations by a lot." In any case, Fisher Price has built up plenty of buzz. The $39 list-price Elmo, which laughs hysterically, rolls over and stands up, is now being bid on eBay (EBAY) for more than $100.

As for the PS3 from Sony (SNE), Toys "R" Us conducted a presale on Oct. 29 and was sold out of the game even before it hit the shelves. Production delays might have caused Sony to miss its goal of having 400,000 PlayStation 3s in U.S. stores, according to several Wall Street analysts including Justin Post of Merrill Lynch (ML). American Technology Research's Paul-Jon McNealy said in a report that Sony's initial shipment of PlayStation 3s might have been only about 125,000.

Airlifting More PS3s

Sony declined to provide specifics on the number of game consoles that have shipped to the U.S. It did, however, release a statement on the issue: "Sony Computer Entertainment America has been airlifting additional shipments of PlayStation 3 systems into the North American market since the launch on Nov. 17. We were able to get a fresh supply of PS3s in the hands of retailers prior to Black Friday, along with games and peripherals. Feedback from our retail partners is that demand is still incredibly high and that PS3s put on store shelves are quickly getting snapped up by holiday shoppers. We will continue to utilize airfreight delivery for the PlayStation 3 to assure a steady stream of systems for North American consumers through the end of the year. Our goal remains to have 1 million units in the pipeline by Dec. 31, 2006."