Retailers and mall owners are gearing up for Black Friday, which is more critical than ever as shoppers cut back their spending. Black Friday falls on November 28, the day after the Thanksgiving holiday, and many retailers have already begun advertising HUGE discounts to attract shoppers as early as midnight.
Black Friday, the traditional start to the U.S. holiday shopping season, means more to retailers this year as they struggle to win over consumers with a recession looming.
Retailers that fail to rack up sales during the three-day weekend face the prospect of clearing out merchandise at profit-crunching prices closer to Christmas.
“While Black Friday sales and promotions have been tremendously successful for the last few years, the day itself takes on a bit more importance when consumers are struggling,” said Ellen Davis, spokeswoman for the National Retail Federation. “In a down economy, people are willing to get up at 3 a.m. and sit in a line outside a store.”
Retailers ring up roughly 10 percent of total holiday sales during the three-day weekend, best known for the deals offered on Black Friday — named for the days when store chains used to turn a profit for the year.
The weekend’s results do not always indicate how overall holiday sales will fare, but with the United States likely in a consumer-led recession, it has added importance.
Consumers will look for bargain-basement prices to help meet austere budgets, while retailers from Wal-Mart Stores Inc to Saks Inc learn if they have the right products at the right prices.
“This year, the Black Friday weekend has profound impact on how consumers and, more importantly, how retailers are going to view the holiday season in totality,” said Janet Hoffman, managing partner of Accenture Ltd’s global retail practice.
From the Associated Press:
After pushing steep discounts throughout November that are usually reserved for the day after Thanksgiving, retailers from Kohl’s to Toys “R” Us are offering even bigger cuts and promotions for Black Friday in a frantic bid to pull in shoppers.
But the bargain hunters showing up for the early morning specials on toys and TVs are not expected to buy with the same gusto as a year ago, as they fret about tightening credit, massive layoffs and shrinking retirement funds.
Not to mention that consumers are already jaded by all those “60 percent off” signs plastered on storefronts. Analysts say shoppers may stick to smaller gifts like cosmetics rather than $1,000 flat-panel TVs in a holiday season expected to be the weakest in decades.
Another concern? There aren’t any must-have items so far, even in toys – though some items have been popular, such as Spin Master Ltd.’s Bakugan.
“I will be careful,” said Joanna Rizzo, 20, an executive secretary from Medford, N.Y. who plans to stick to her budget of $200 for the day after Thanksgiving. Rizzo has just finished paying off her credit cards, and will use cash to pay for her presents. Overall, she plans to spend about $600, less than the $1,000 she spent on presents last year.
In recent years, merchants including Wal-Mart Stores Inc. and Toys “R” Us Inc., have been pushing earlier the sales and expanded hours that were typically reserved for Black Friday – named because it historically was when stores turned a profit – to jump-start the season.
But in this year’s deteriorating economy, stores from luxury retailers to consumer electronics chains, pressed the panic button – slashing prices up to 60 percent on even new merchandise. After reporting the worst October sales in at least 39 years, stores are seeing more weak sales in November, according to the International Council of Shopping Centers-Goldman Sachs Index, which measures sales at stores opened at least a year.
Kmart, a division of Sears Holdings Corp., started offering products at what it calls “Black Friday prices” earlier in the month – the first time it had done so. Drugstore chain CVS Caremark Corp. will launch a weeklong “Black Friday” promotion on Sunday, offering early morning deals on items ranging from GPS devices to digital photos frames.
“Black Friday is going to have some very impressive deals, but overall the deals won’t be any better than what you saw before,” despite all the hype, said Dan de Grandpre, founder and editor-in-chief of dealnews.com. “Retailers have already given their best shots already.”