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Retailers cutting deep into prices to attract customers

FARGO -- It's already the season for holiday deals with many local retailers discounting prices now instead of waiting for Black Friday, traditionally the day after Thanksgiving.

Retailers are offering holiday promotions earlier in order to win over more customers because shoppers are looking at price before anything else, said Kathy Grannis, National Retail Federation spokeswoman.

A recent study by BDO Seidman, a national accounting and consulting organization, shows that 96 percent of chief marketing officers at leading U.S. retailers expect to offer more discounts and promotions this holiday season. That's up from 88 percent last year and 73 percent in 2007.

"Kmart realizes that the economy is tight and a lot of retailers felt the impact of that last season," said Molly Lange, Moorhead Kmart store manager. "So anything we can do to get a jump-start with our Christmas shoppers, we're just trying to be aggressive."

Target has started matching prices when shoppers bring in competitors' ads, said Ben Smith, Fargo Target store team leader.

In September, Walmart announced that it is pricing more than 100 toys at $10. Earlier this month, the company announced that it slashed the prices of even more toys, many by 20 to 30 percent.

"We've done some very aggressive pricing in our toy department and we've seen some great traffic and customer responses," said John Pies, manager of the newest Fargo Walmart.

Seventy percent of consumers planned to start their holiday toy shopping before Halloween, Walmart customer research shows. Two out of 10 planned to finish by Halloween, and more than 50 percent of moms want to finish their holiday shopping by Thanksgiving.

"We've noticed that shoppers want to do their shopping earlier," said Pies. "It seems like they're planning more forward-thinking, given the economy."

The National Retail Federation finds that people are still beginning the majority of gift shopping in November. What's different this year are the sales and promotions that began as early as July.

"It's just the nature of the economy that we're in," Grannis said. "It's hard for people to shop for gifts these days and retailers understand that. They're trying to find creative ways to connect with their shoppers and give them great prices at the same time."

Many stores are enticing customers to spread out their shopping, because retailers have had to cut inventory levels, Grannis said.

More than half of retailers surveyed by BDO Seidman said they reduced holiday inventory purchases by an average of 10 percent.

Stores are also extending hours and luring Web site shoppers by offering free shipping and online-only sales.

Because offering Black-Friday-level savings weeks or even months in advance is a product of the economy, it's not a practice that will necessarily stay in place, Grannis said.

Chief marketing officers expect overall sales to increase by 2.6 for the 2009 holiday season, according to BDO Seidman.

Tracy Frank is a reporter at The Forum of Fargo-Moorhead, which is owned by Forum Communications Co.