Big Apple Diary : Black Friday Results
02-12-2008
This day is fondly referred to as "Black Friday" by U.S. retailers who are counting on the surge of shoppers that will hopefully push the stores into profitability for the year. The fact is that the weekend itself accounts for approximately 40% of annual sales. Traditionally, Black Friday is the barometer for the success or failure of a holiday season, but let's face it, this is anything BUT a traditional year.
Wall Street is hungry for results as retailers face their most challenging Christmas season since 1982, when we were coming out of recession. In this challenging economy, American consumers were lured by the "steals" rather than "deals". Many left their Thanksgiving dinner tables to proceed directly to the outlet malls for the "Midnight Madness" events…..others clogged the highways at 3:00 am last Friday as they were determined to be the first customers through the doors for early morning door busters on electronics, apparel, toys & jewellery.
It seems like every year chains accelerate opening times….this year the earliest were JC Penney and Kohls both who threw their doors open to a throng of customers at 4:00 am.
Wal-Mart, Toys "R" Us, Macys, American Eagle and Sears opened at 5:00 am while Target opted for 6:00 am, once again using a clever ad campaign encouraging prospective customers to register on their website for "wake up call" service.
Believe me; you know it's competitive out there when a department store like Macys opts for a 5:00am opening! Better tier stores like Bloomingdales & Nordstroms opted for later times of 8:00 and 9:00 am respectively. Then we get to the luxury retailers who don't "Do" doorbusters and obviously are not dealing with reality as they continue to convince themselves that their core customer remains unaffected by the economy….so a 10:00 opening suits them!
Whether mass merchant, specialty or department store, everyone pumped up the amount of early bird specials. Admittedly, I was not an early morning participant but opted to watch the morning news reports with a mug of Starbucks in hand. My preference was to allow the local news to interview consumers in early morning queues, many who had camped out hours before and while panning in on overcrowded parking lots swarming with potential customers.
Earliest results of the weekend validate that the customer did respond…Americans like the sounds of 40% – 75% off even better than Jingle Bells so national tracking firms are projecting that sales rose 3% over 1 year ago…higher than expected. But the trade group considered the guru's of the retail industry; National Retail Federation (NRF) expects overall holiday spending will rise + 2.2 % from 2007 which is the lowest growth since 2002. Traffic was busiest in the South and Midwest but weakest in the Northeast and West coast. Friday customer traffic was encouraging but many reported that it fell off on Saturday and Sunday. The best gauge will be this coming Thursday when US retailers release November same store sales.
So what were the items of choice???? Overwhelmingly electronics were the front runners …..
- Flat screen TV's…especially when the consumer is cutting back on nights the town
- Digital picture frames
- GPS devices were a new category
- Digital cameras
- Computers….no longer an indulgence but a necessity
- Phones
Overall apparel did take a back seat to electronics but retailers continue to take drastic measures to move goods and lower inventories. Let's face it, the time is now to offer creative bargains. So what's a retailer to do to drum up business??
- Since prices are already drastically reduced at 40% – 75% off then the next step is to offer "2 or 3 for 1" deals or "Buy more Save more" events. Macys already launched this with their "The more the merrier" campaign.
- Better and Luxury tier stores are encouraging customers to focus and personalize their gift selections. Saks wants you to "match the personality to the recipient."
- Many stores are picturing streamlined gift lists for easy gift picking; under $500, under $100 or under $20
Most telling will be when the "dust settles" this holiday season and the financial impact of deep markdowns and eroding margins is realized. Everyone is already guessing "who will survive and who will fall?" History is about to be rewritten as the retail graveyard continues to grow claiming brick & mortar stores as well as online retailers. The latest "victims" are:
Linens N Things, Steve & Barry's, Circuit City but others are certain to follow. Those in the most jeopardy are independent luxury jewellers and regional department stores but the consumer "jury" is out. But complicating matters even more is a shorter buying season……just 27 days between Black Friday and Christmas!
So for now, goodbye Black Friday & HELLO Cyber Monday………
Till next week,
Cheryl
