Nov 24, 2009
"Black Friday" deals may not signal retail comeback
Nov 24, 2009
By Jessica Wohl
CHICAGO (Reuters) - When the U.S. holiday shopping season kicks off on the day after Thanksgiving, retailers can expect to see millions of less frightened, but even more bargain-hungry customers cross their thresholds.
Industry experts expect a strong turnout on Black Friday, which falls on November 27 this year, as deep discounts lure shoppers after more than a year of subdued spending. But they caution it will not mean a bumper holiday season in the weeks leading up to Christmas since consumers still remain cautious.
"Given what we know about consumer shopping patterns, even this month, I would suspect it will turn out to be a very strong performance," said Michael Niemira, chief economist of the International Council of Shopping Centers.
Special promotion days have been big drivers of sales, he said, pointing to the lift retailers saw on the November 11 Veteran's Day holiday.
Retailers and websites dedicated to Black Friday deals have leaked sales plans earlier than usual, in the hopes of sparking demand for flat-panel televisions, toys and other goods after 2008's worst holiday season in decades.
While the economy remains weak and unemployment has risen, U.S. shoppers have had more than a year to adjust their spending and digest the bad news. In 2008, holiday shopping started just weeks after the global financial crisis erupted.
"Certainly last year was a year of tremendous uncertainty going into Black Friday because we were right in the middle of the storm," said Chris Donnelly, a partner in Accenture's retail practice. "There is much less panic, I would say, or much less uncertainty, as we go into the season."
Even so, more than 172 million shoppers visited stores and websites from Thanksgiving Day through Sunday last year, up from 147 million in 2007, according to the National Retail Federation. The average amount of money spent by shoppers over that weekend rose 7.2 percent to $372.57 per person.
Those numbers, however, did not prevent a sales slide of 3.4 percent for the entire shopping season last year, marking the first decline since the NRF began tracking such data.
While the NRF has not issued a Black Friday forecast, it expects 2009 holiday season sales to decline 1 percent. The ICSC forecast a 1 percent to 2 percent rise.
"Retail sales have been, while not stellar, somewhat stabilizing over the past few months and there is every reason to believe that as we go into the holiday season that we are going to see some stability as well," Donnelly said.
The term "Black Friday" is said to have originated in Philadelphia during the 1960s to describe the difficulty of police and drivers to deal with exceptionally heavy traffic on that day as shoppers flooded the city's commercial center.
The phrase was later co-opted by retailers to refer to the holiday shopping period as a time of year when their business moves into the black, or turns a profit.
Niemira, for one, refers to Black Friday as "Bargain Friday" since it is known for deals.
"If Black Friday is flattish to slightly positive, that would be encouraging, but I don't think we'd be ready to kind of write the story of the season yet," Donnelly said.
Sixty-one percent of chief marketing officers at leading U.S. retailers surveyed by BDO Seidman expect Black Friday sales to be flat, while 33 percent predicted an increase.
One factor that could help spur consumer appetite is a prediction for good weather, with mild temperatures and slim chance of precipitation, though the Pacific Northwest could see strong storms, according to tracking firm Planalytics.
Market research firm IBISWorld expects total retail sales over Black Friday weekend to rise 2.8 percent to $42.9 billion. It expects 76.9 million people to swarm into retail stores on Black Friday alone.
ShopperTrak, which measures customer traffic, expects Black Friday to again be the busiest day in stores after accounting for 6 percent of traffic in the 2008 holiday season.
Target Corp, Best Buy and others are opening at 5 a.m. on November 27, while Chelsea Premium Outlets locations are opening as early as 9 p.m. on Thanksgiving Day.
Wal-Mart Stores Inc is keeping most of its discount stores open for 24 hours a day to help control crowds after a worker was trampled to death at one of its stores during last year's Black Friday rush.
SEARCHING FOR DISCOUNTS
After last winter's bevy of deep discounts, many consumers will only open their wallets if they spot a bargain. Almost 70 percent of consumers surveyed by America's Research Group said they wanted to see discounts of at least 50 percent before they would buy something for the holidays.
"The range of the promotions will be different from what we've seen in recent years, because it has to be," said NRF spokeswoman Kathy Grannis. "Retailers know that consumers are so bargain focused and bargain conscious."
BDO Seidman's poll found that 96 percent of retailers planned to increase promotions and discounts this year.
"They are going to have to be creative," said Ted Vaughan, a partner in BDO Seidman's retail and consumer product practice.
Of course, fewer retailers are vying for that business. According to Bain & Co, 27 retailers went bankrupt in 2008 and 18 more have done so to date in 2009. Together, those chains used to account for about $25 billion to $30 billion in sales.
Earlier holiday-themed sales expanded the season this year and may make it easier for consumers who have less credit available, Vaughan said. Sears, Kmart and Toys R Us have also been touting layaway plans to help shoppers spread out spending.
Consumers flocking to stores may not be buying gifts. A Consumer Reports survey found that 66 percent of shoppers heading out over the weekend will be shopping for themselves.
(Editing by Bernard Orr and Maureen Bavdek)
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