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Black Friday Sales Break Records; Is Consumer Spending Sustainable?

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The 2011 retail holiday season has started with a bang.

Retail sales over Thanksgiving weekend totaled $52.4 billion, a 16.4% increase from 2010, according to the National Retail Federation, an industry trade group. Shoppers spent an average of $398.62 over the holiday weekend, a 9.1% increase from last year and the biggest gain since 2006, the NRF said Sunday. The increase in sales and store traffic can be attributed to early openings and steep discounts for apparel and electronics, with many retailers opening their doors at 9 p.m. Thanksgiving evening, an industry first.

This year's Black Friday sales broke records and consumers showed an increased appetite for shopping despite the recent negative headlines: euro zone debt crisis, high U.S. unemployment, falling stock prices.

The question now on retailers' minds is: can the shopping momentum last?

Black Friday, the unofficial start of the holiday season and the biggest day for retailers, proved to be a success; consumer research service ShopperTrak reported a 6.6% year-over-year increase in store traffic over the Thanksgiving holiday weekend.

Retailers and industry trade groups can broadcast the impressive numbers from every corner and roof top, but what needs to be examined is how consumers are shopping: are they using cash or postponing their payments with credit cards and special interest-free deals? Are consumers dipping into their savings to pay for flat-screen TVs and clothing? Doorbuster deals may have enticed consumers to cut their Thanksgiving dinners short to camp outside, but did consumers stray from their holiday lists? Promotions are just one piece of the retail holiday pie; retailers will need to do a lot more to encourage repeated trips and impulse purchases.

As Aaron and Henry discuss in the video, don't let the upbeat headlines fool you. The numbers and statistics from Black Friday sales will be tweaked and revised as the shopping season gathers steam. Consumers and retailers shouldn't necessarily dismiss the numbers being reported, but it's too early to assume that retail spending can continue at its current pace. Keep in mind that the NRF is forecasting just an increase of 2.8% in sales for this holiday season - a significant decrease from last year's 5.2% gain.

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