Midnight madness materialized just as retailers wished, but there wasn’t enough of the same old Black Friday magic in malls and along major shopping avenues through last week to juice up the mood for the holiday season.
That leaves retailers prepared to stay the course and still confident, after a week’s worth of intense promoting and extended store hours, that they’ll meet holiday goals, conservatively set at 3 to 4 percent ahead on average. They also believe consumer confidence is holding up, though there’s plenty of uncertainty with the fiscal cliff looming and with Northeast cities still recovering from Hurricane Sandy, which cost retailers billions of dollars in business. For fashion retailers, it will be impossible to entirely make up the lost volumes, though companies involved in construction and home furnishings will see a lift as communities rebuild.
Terry J. Lundgren, chairman, president and chief executive officer of Macy’s Inc., characterized Black Friday as “similar” to last year, while at Bloomingdale’s, a division of Macy’s, “We have a game plan and a strategic plan and you tweak here and there for things, but we are not changing our game plan,” said Michael Gould, chairman and ceo.
“We are hitting our targets,” said Linda Chang, Forever 21’s senior marketing manager. “It is a little early for us to tell, but in the past two weeks, we have been seeing good, strong sales growth.”
“December is a big month. A lot can happen,” cautioned Kathryn Bufano,president and chief merchandising officer for Belk Inc., the Charlotte, N.C.-based Southern regional department store chain. Bufano said Belk had an “unbelievably good,record-volume” Black Friday. It helped that Belk opened at midnight on Thanksgiving, three hours earlier than in 2011, and planned aggressively by offering over 300 doorbusters from midnight to 1 p.m. on Black Friday.
“Many of us were out in the stores. It was very packed from midnight to 2:30 or 3 a.m., but it wasn’t a mob scene,” Bufano said. Traffic settled down from 3 to 5 a.m., helping the company restock and tidy up for the next wave of shoppers. “It was very strong from 5 all the way through,” Bufano said.
Industry-wide, electronics, smartphones, toys, small kitchen appliances, footwear (particularly boots), coats and sweaters carried the day and were buoyed by discounts typically at 40 to 60 percent off, and extended to before, during and after Thanksgiving. Best Buy, for example, staged “a countdown” to Thanksgiving, offering deals every day leading up to Thanksgiving.
In a very bullish report on the season’s start, the National Retail Federation, which has projected a 4.1 percent increase in total holiday spending, reported total spending for the four days ending Sunday hit $59.1 billion, a 12.8 percent increase from the $52.4 billion spent during the comparable 2011 period. Including projections for Sunday, the average holiday shopper spent $423, up 6.3 percent from $398 last year. RELATED STORY: Black Friday Bestsellers >>
The NRF said apparel and accessories were the most purchased category, favored by 57.7 percent of buyers versus 51.4 percent a year ago. The percentage purchasing gift cards also jumped, moving to 32.6 percent from 23.1 percent last year, according to research compiled for the NRF by BIGinsight. Matthew Shay, president and ceo of the NRF, said “Everyone I’ve spoken to feels very bullish that the momentum from the weekend will carry into Cyber Monday. Everyone has held back some special deals available only for it, and shoppers are looking forward to that.”
The NRF projects 129.2 million shoppers will be online on Monday looking to buy, up from 122.8 million in 2011 and 106.9 million in 2010. About 85 percent of online retailers — both pure play and multichannel —will have special promotions for the day.
Thanksgiving hours encouraged early shopping, especially among younger consumers. Twenty-eight percent of weekend shoppers — about 35 million people — were at stores before midnight on Black Friday, up from 24.4 percent, or about 29 million, last year. Forty percent of those age 18 to 34 participated in Thanksgiving night shopping. The share engaging in Thanksgiving shopping in 2009 was just 3 percent.
A less-robust report on Black Friday itself came from ShopperTrak. “Consumers responded to Thursday’s promotions greater than we expected and better than retailers might have expected, which siphoned off some dollars from Black Friday,” said Bill Martin, chairman of ShopperTrak, which estimated Black Friday generated $11.2 billion in sales in the U.S. this year, versus $11.4 billion in 2011.”
Martin said that Thursday and Friday combined would exceed $11.4 billion, though he didn’t have a specific estimate. “It was a reasonably good start for the holiday,” Martin said. “If the volume was down in the $10 billion range, that might have been cause for concern. If you don’t have a good day on Black Friday, it’s hard to catch up.” ShopperTrak bases its estimates on data from 40,000 sensors in North America monitoring traffic in the stores, government statistics, proprietary retail data and some of its algorithms.
By the weekend, retailers were fixated on measuring the impact of their Thanksgiving store openings, which were more widespread this year. It’s believed the Thursday openings, rather than encouraging shoppers to buy more items, just spurred them to shop that day and less on Black Friday. Also, some retailers questioned whether the volumes attained on Thursday were enough to rationalize the costs of keeping stores open on the holiday, though there was a consensus that retailers open on Thanksgiving probably grabbed some business from stores that stayed closed.
“Increased hours do not increase the demand pool. Thursday didn’t make a huge amount of difference,” said Craig Johnson, president of Customer Growth Partners. He suggested Thursday openings just shifted sales rather than amount to plus sales.
Specialty retailers felt that earlier Black Friday hours were effective, though in many cases, crowds leveled off pretty quickly. “Because of the Wal-Marts and Kmarts of the world and their earlier deals, I think that softened a little bit of the traffic, but there were still significant lines,” said Chang of Forever 21, which had 313 of its 458 stores open at midnight.
Gap Inc., across all its brands, had 1,100 stores open Thanksgiving. “We felt that there was good demand pretty early on. It dropped down and then there was steady flow in the early morning hours through the rest of the day,” said Mark Breitbard, president of Gap North America. “We will be studying this to see how the traffic patterns have changed by opening a little bit earlier to understand the consumer dynamics. A lot of people said there wasn’t as much frenzy, but we still saw lines out the door.”
Gary Schoenfeld, ceo of Pacific Sunwear of California Inc., believes the shift to Thursday night, which he called a “sea change” initiated last year, has retailers better positioned for business at their full-price locations. “The outlet malls used to own the jump-start on Thursday night. Now, it is clear that most all malls around the country are open, and you are seeing full-price malls win back that Thursday night business,” he said.
Retailers — brick-and-mortar and online — staged Cyber Monday sales before Cyber Monday, which as a consequence will lose some steam this year. It’s considered the biggest volume day of the year online, but retailers assured that both Cyber Monday and Black Friday are still very significant volume days, even as business gets spread out more before and after those days.
Apparel wasn’t top of mind for most consumers.“People do not feel the urgency to shop for clothing on Thanksgiving,” said Hana Ben-Shabat, a partner in the retail practice of A.T. Kearney consulting firm, which projected a modest 2 to 3 percent increase in total retail sales last week. “There’s an overall perception that [apparel] promotions will continue. On other hand, consumer electronics, toys and home got a lot of attention. There was a lot of advertising on doorbusters and people know doorbusters are in small quantities. Apparel was not a winner last week, but there is time to recover that.”
DEPARTMENT STORES ROCK
Belk’s Bufano said the store sold “hundreds of thousands of boots in a day,” including Rampage boots, priced at $19.99. Sweaters, denim, small kitchen appliances such as single-serve coffeemakers and mixers, luggage and tablets were also bestsellers. “We feel we are going to have a good Christmas, better than 5 percent ahead.” She acknowledged that usually there’s a lull in traffic the first week of December, and Belk hopes to counter that with a strong cyber effort at the beginning of this week and a “Santa fest” Saturday at all Belk stores.
Brendan Hoffman, president and ceo of The Bon-Ton Stores Inc., visited his stores in Pennsylvania on Black Friday. “I have never seen malls and stores this crowded. It looked like the last Saturday before Christmas.” Bon-Ton did best with soft home, shoes and cold weather apparel, which “bodes well for the next five weeks,” Hoffman said. “It is a long stretch between now and Christmas, but there are reasons to be optimistic judging by the traffic.”
“We were very pleased with the weekend,” said Bloomingdale’s Gould. “There was a terrific beat in the stores, with a lot of tourists at 59th Street. Business was pretty good across the board,” he added, citing men’s wear, sweaters, cosmetics and coats.
J.C. Penney broke from its controversial everyday low price policy by running sales on certain items. People queued up before 6 a.m. store openings Friday for specials like $25 women’s boots. Bestsellers included junior sweaters, men’s flannels, women’s pashmina scarves, bed pillows and $8 kitchen electronics, according to Penney’s Twitter news feed.
Von Maur enjoyed “nice increases” at its 27 stores and online business, according to Joy Place, vice president of merchandising at the Davenport, Iowa-based retailer. “It’s pretty encouraging considering we are not a store for the big day-after-Thanksgiving promotions,” Place said. “What was marked down before is still marked down.”
Von Maur opened only an hour earlier than usual Friday and did well with handbags, contemporary sportswear, shoes, cosmetics, men’s half-zip sweaters, Coach Legacy, Michelle and Michael Kors watches, Kate Spade cross-body bags and Tommy Bahama sweaters, while cold weather apparel lagged. SPECIALTY STOREPROMOTIONS PAY OFF
RetailNext, which provides a technology platform for retailers to measure and understand shopper behavior, said specialty retailers were more productive on Black Friday 2012 than a year ago. Although overall traffic to the segment was down 5.6 percent, total sales rose a healthy 16.2 percent due to conversion rates up 2.3 percentage points, and average values seen as 20 percent better than a year ago. The busiest period was from 10 a.m. to 4 p.m., with 58.5 percent of the day’s shopping trips and 60.2 percent of the day’s sales happening then. Black Friday’s peak sales hour was noon to 1 p.m., and traffic peaked from 2 to 3 p.m.
“Business obviously is more and more competitive every year,” said Jerri Ulves, vice president, general merchandise manager, at 135-unit Anaheim, Calif.-based retailer Styles For Less, who singled out knit bottoms, jeggings and lightweight sweaters as strong sellers. “We offered an entire-store deal, which most of our competitors did. That seemed to work for customers this year because they weren’t going after specific items. They were looking for multiple items and a lot of different product. I don’t know if it was weather driven or fashion driven, but it was exciting to see them buying multiple items.”
“I would expect aggressive promos in the marketplace to continue,” said Gap North America’s Breitbard, who pointed to sweaters, knit tops, colored jeans and pajama sets as brisk sellers. “As we have been saying all year, we have been trying to present a pretty balanced approach, and we have felt confidence in our assortment.”
C. Wonder, the 11-unit retailer owned by Christopher Burch, distributed scratch-off cards with rewards at the Macy’s Thanksgiving Day Parade. The same day, it offered 30 percent off already marked down goods. On Friday, up until 8 a.m., C. Wonder offered an additional 50 percent of off markdowns, plus 30 percent off the entire store.“We had a very high rate of conversion,” said Amy Shecter, president. “Most importantly, our product is so much better this year than last year,” particularly with personalizing of products.
Jacinto Romero, director of operations at Planet Blue, said the five-unit Southern California retailer nurtured a relaxed atmosphere on Black Friday. It offered free manicures and juice, and a 10 percent discount off purchases of $100 and above, and a 20 percent off purchases of $200 and above. Romero said, “We adopted a system that said as long as you shop in the store, you are going to get something. We were able to beat last year’s numbers.”
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