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Retailers went into Black Friday weekend with low expectations and came out with a sense of relief. The traffic arrived, thanks to unprecedented markdowns that will take a big bite out of fourth-quarter profits.

This story first appeared in the December 1, 2008 issue of WWD.  Subscribe Today.

Outlets and discounters, which staged the biggest bargains on designer clothes and electronics, were busiest, though executives from department stores and specialty chains contacted Sunday said they were also pleased by the turnout.

“Some of us were wondering whether shoppers would come out at all,” said one retail chief executive who requested anonymity.

“Black Friday is still one of the biggest days of the year,” said Terry Lundgren, chairman, president and chief executive officer of Macy’s Inc. It’s typically the second largest volume day of the year, eclipsed only by the Saturday before Christmas, he noted.

“I went to lots of stores and there was clearly a lot of traffic in malls and outlet centers,” said Steven I. Sadove, Saks Fifth Avenue’s chairman and ceo. “Customers were shopping for deals. If you had sharp price points, you were seeing volume.”

More than 172 million shoppers visited stores and Web sites over Black Friday weekend, up from 147 million shoppers last year, according to the National Retail Federation’s 2008 Black Friday Weekend survey of 3,370 consumers, conducted by BIGresearch. Shoppers spent an average of $372.57 last weekend, up 7.2 percent over last year’s $347.55. Total spending reached an estimated $41 billion. The survey was conducted Nov. 27 to 29.

“Pent-up demand on electronics and clothing, plus unparalleled bargains on this season’s hottest items helped drive shopping all weekend,” said NRF president and ceo Tracy Mullin.

However, she warned that, in light of the recession, “holiday sales are not expected to continue at this brisk pace, but it is encouraging that Americans seem excited to go shopping again.” Declining gas prices didn’t hurt either.

Retailers remain desperate to move inventories that are outsized in proportion to demand, and some expect consumers to take a breather after last weekend, leading to a lull in shopping that could last until a week or two before Christmas. They are also concerned about declining tourism, particularly affecting big flagship stores in gateway cities.

Further bad news is expected to arrive on Thursday, when major retailers report November comparable-store sales. Comparisons to last year won’t be pretty because stores were handicapped by Thanksgiving falling five days later this year than last, meaning there were fewer big shopping days in November. However, the shortfall could be made up in December and retailers warn not to read too much into the November results. A truer read of the season would come from examining the combined sales of both months.


Further scars on the season occurred Friday at a Wal-Mart in Valley Stream, N.Y., and at a Toys ‘R’ Us in Palm Desert, Calif. At the Wal-Mart, a stampede of bargain hunters at the opening resulted in the death of one store worker who was trampled. No arrests have been made yet, and store videos are being reviewed. Amid the chaotic crowd, it could be tough to determine who is to blame, although the incident set off a flurry of criticism of both Wal-Mart’s alleged lack of adequate security personnel and the inhumane crowd desperate for a bargain. A column in Sunday’s New York Times labeled the incident Wal-Mart’s “Guernica” after Picasso’s famous painting.

Hank Mullany, senior vice president and president of the Northeast division of Wal-Mart U.S., said on Friday, “We expected a large crowd this morning and added additional internal security, additional third-party security, additional store associates and we worked closely with the Nassau County Police. We also erected barricades. Despite all of our precautions, this unfortunate event occurred.”

He added, “Our thoughts and prayers go out to the family of the deceased. We are continuing to work closely with local law enforcement and we are reaching out to those involved.”

At the Toys ‘R’ Us, two men were shot and killed inside the store. Police were continuing to investigate, according to reports.

Retailers reacted to the Wal-Mart incident by saying it could lead to changes in security and crowd control in response to doorbusters, and to tempering the character of the early-bird offerings which can create a climate of frenzy over limited offerings. The New York Times reported Saturday that fights and injuries occurred at other Wal-Marts around the country.

A crowd of about 5,000 stormed Macy’s Herald Square on Friday at the 5 a.m. opening, when 200 doorbusters compared with last year’s 20 were offered. There were no incidents. Lundgren was on the scene and concluded, “There was some pent-up demand,” as he watched the traffic. Before Thanksgiving, Macy’s and other stores offered sharp markdowns, but Lundgren said the pre-holiday promoting wasn’t particularly effective. It took the allure of Black Friday and the promise of even better deals — plus a long holiday weekend — to get consumers to shop.

To cope with what retailers are calling their toughest season ever, the key strategy is to mark down fast and furiously, in many cases 50 to 75 percent off, as steep as discounts would normally be after Christmas. One principal said, for example, that with a turtleneck, regularly priced at $50, it’s better to mark it down to $29.99 right away, and maybe sell out, than mark it down to $39.99, sell some and need to mark it down again later. Stores must clear inventories to make room for spring goods which start arriving in mid- to late January. If the fall goods aren’t cleared in the stores or outlets, the merchandise gets sold to jobbers for a tiny fraction of its cost.

“If you take the markdowns now and move the inventory, you will get through this and come out stronger later,” Lundgren said. Asked about the impact on profits, Lundgren replied, “Of course, it will take a bite out. We have already forecasted profits down.”

“You need to make sure you get through your inventory over the next four or five weeks,” explained Brendan Hoffman, ceo of Lord & Taylor. “We’re in relatively good shape with the sales per stock trend. With all of the uncertainty, the need to work down inventories is even more important this year. A markdown you take today is cheaper than a markdown you will take later.”

Traffic at L&T “really built as the day went on,” Hoffman said. “It certainly exceeded our very conservative expectations, but it came at a price. We made sure our prices were very sharp. Overall, the customer was definitely out there shopping.”

By Saturday, store traffic was already subsiding across the country, but the NRF said it was still better than the Saturday after Thanksgiving a year ago. As expected, many shoppers purchased clothing and accessories over the weekend, while also popular in descending order were books, DVDs, CDs and video games and consumer electronics. Toys were also big sellers, though gift cards dropped 10 percent against last year. NRF continues to project that holiday sales will rise 2.2 percent this year to $470.4 billion.

Here, a look at the weekend by retail channel:


At Bloomingdale’s, “The customer found great value,” said Michael Gould, chairman and ceo. “For soft goods, it was the best week of the fall season so far,” a result of the values offered, as well as “pushing newness and fresh receipts.” Contemporary men’s and women’s sportswear were very strong categories over the weekend, he added.

Steve Pernotto, executive vice president, Belk Stores, said Black Friday business “didn’t meet our overall expectations, but we were encouraged by the outcome. We noticed we were selling the same number of items in the morning, but at a lower average retail price. In the early afternoon, the trend changed and overall sales were much stronger than last year.” The lowest-priced items weren’t necessarily bestsellers. Shoes, fashion accessories, men’s and women’s sweaters, denim and electronic gadgets sold well.

J.C. Penney said Black Friday shopping was strong across all areas of the country with customers responding well to the gift assortments and value. Some bestsellers were the “red box gifts” including the Marshmallow Popper, USB turntable, Razor Ripstik, MP3 players and Einstein Hand Held Games. “Practical” gifts, such as sweaters, boots, wool coats, luggage, denim, small electronics and cookware, as well as junior and young men’s apparel, and fine jewelry also sold well.

Lord & Taylor said shoes, handbags, coats, cosmetics and men’s classifications, as well as Uggs were hits. However, according to one executive from a different department store, “There were no big mind blowers.”

Target stores opened at 6 a.m. on Friday for the retailer’s annual 2-Day Sale. Lines formed as early as 4 a.m. and turnout was strong with steady traffic throughout the day, a spokesman said. Customers headed straight to the electronics department where hot items were the TVs advertised on the cover of the 2-Day Sale circular, GPS systems, iPods, Nintendo Wii’s and DVDs. “Overall, guests were upbeat and said they appreciated how organized Target is for the busy shopping day,” the spokesman said. “The maps, which were handed out to guests as they waited in line or arrived at the door, highlighted where hot items were located and were a big hit.” Target previewed its two-day sale circular online at 2 a.m. (CST) Wednesday. As of noon that day, more than 1.5 million people had gone online to see the “sneak peek.”


Neiman Marcus promoted discounts of 50 to 65 percent off fall and holiday goods on Friday and Saturday. In previous years, those markdowns would be reserved until after Christmas. “The statement jewelry seemed to be hot this weekend as well as lace and berry tones, and scarves are doing surprisingly well,” said Ginger Reeder, vice president. “We’re certainly more promotional than we would like to be. It’s a response to the current economic climate and an attempt to remain competitive and not make a change in our strategy.”

Tender, a designer boutique in the Detroit suburb of Birmingham, had a 35 percent gain last weekend driven by a 50 percent discount off all fall and holiday goods, said Karen Daskas, co-owner. She saw self-purchasing rather than gifting. Lanvin, Pringle of Scotland, and Jerome Dreyfuss handbags were standouts. “The people we know will be incensed if the Big Three [GM, Ford, Chrysler] aren’t given the bailout,” Daskas said.

Bob Mitchell, co-president of Mitchells/Richards/Marshs in Connecticut and New York, which attracts a large Wall Street and hedge fund clientele, said: “Business continues to be very challenging. Traffic is off significantly and this weekend was no different. And with the calendar shift, Thanksgiving was a week later so we have a lot of ground to make up in December.”

He noted that traditionally, Thanksgiving weekend is not as strong for his stores as for big-box retailers. “The weekend after is much bigger,” he said. “But the combination of the economy and the decline in traffic made the numbers less than robust.”

Mitchell said the stores were forced to cut price this year “several weeks earlier than last year, but it’s still not driving people in the door. The competitive landscape with all the markdowns is not helping retailers and is confusing customers,” he said. Ironically, the company’s best performer is Hermès, the only nonpromotional business in the store. “The distribution is so tight and there are so few places to buy it, and people know that,” he said.

Mario’s, in Seattle and Portland, said customer traffic was strong, though markdowns have been “sneaking in earlier than last year to keep up with the competition,” said Lynwood Holmberg, creative director and women’s buyer. “It’s not a matter of our business being be down. It’s by how much.”



At AnnTaylor Stores Corp., “Our performance on Black Friday was somewhat stronger than we were expecting at both divisions — particularly Loft,” said Kay Krill, president and ceo. “Clients were clearly waiting for the big shopping day and looking for a combination of great gifting options and great deals.…We continue to expect this holiday shopping season to be challenging, due to ongoing macroeconomic softness and uncertainty and the related decline in consumer confidence and spending.”

Ann Taylor featured $30 off cashmere sweaters, 25 percent off outerwear and sale items, in addition to 20 percent off entire purchases through noon. Loft featured a $29.50 event with key sweaters and gifting items and offered 40 percent off sales items, in addition to a 20 percent off early-bird special through noon.

Gap Inc. saw good traffic across Gap, Banana Republic and especially the lower-priced Old Navy stores. Outlet stores opened at midnight Black Friday, and other promotions included Samsung MP3 giveaways with purchases of $20 or more, and buy-one-get-one free specials on adult and kids’ sweater sets. “We know it’s tough out there today with the economy and we’re working hard to bring people in across all brands, promotions helped us there,” said spokeswoman Kris Marubio. “Still, everyone is managing inventory very tightly.”

Apple, which rarely discounts, held a one-day sale Saturday which brought the company’s pricing into line with approved Apple retailers, such as Amazon and PC World, which regularly reduce Apple products. For example, the iPod Shuffle started at $49 and the iPod Nano, started at $149.

Forever 21, with an average sales ticket of less than $50, used low price points on trendy merchandise as an advantage Friday. The chain reported higher foot traffic than last year and stronger sales, but didn’t get specific. Stores lured shoppers with gift card promotions, with the first 100 to 150 people getting cards worth $10, $21 or $300.

Scott Baskin, president of Mark Shale, a men’s and women’s specialty store chain, said Black Friday was better than anticipated. “Our expectations were somewhat muted,” Baskin said. Locations in Dallas, Kansas City, St. Louis and Chicago suburb Oakbrook were among the best performing with women and men buying mostly for themselves, he said. There were no particular bestsellers or trends discernible. “It was a little bit of everything,” he said. “All the big department stores are cutting prices and we’re doing our best to catch up and stay even.” Along Michigan Avenue, “It was just my observation, but it seemed like there were a lot more people eating hot pretzels than carrying shopping bags.”

Khajak Keledjian, Intermix co-founder, also lamented department store promotions. “They are rolling out insanely competitive incentives in reaction to the financial climate. The whole fashion sense and appeal is gone. It has completely ruined the season, with incentive points, offers of no interest for one year, markdowns on new merchandise that’s not even two weeks old, and basically 70 percent discounts from original prices. They are wiping out specialty retailers and young designers.”

On the positive side, new resort pieces are selling, particularly when combined with day, evening and cruise looks. “The mentality of our customers at the moment is having multiple reasons and occasions for each item in their wardrobe,” Keledjian said. “For example, we are styling the new Stella McCartney resort jumpsuits with cropped winter white leather Helmut Lang shearling jackets.”


ComScore, which tracks online results, reported e-commerce spending for the first 28 days of the holiday season reached $10.41 billion, marking a 4-percent decline versus the corresponding days last year. Black Friday saw $534 million in online spending, up 1 percent. For the combination of Thanksgiving Day and Black Friday, online sales were up 2 percent relative to last year.

Forrester Research Inc. continues to project about 12 percent growth for online holiday sales. In October, sales online grew about 10 percent, said Sucharita Mulpuru, Forrester analyst. However, average order size was down due to deep discounts.

The BIGresearch poll for NRF found that 84.6 million consumers plan to shop online from home or at work today, up from 72 million in 2007 and 60.7 million in 2006.

“Hopefully this marks the beginning of the real holiday season,” Mulpuru said. “There was a lot of negative press in November, but I think a large part of that is people were waiting for the sales and delaying their purchases. There are always a lot of people who delay their purchases and wait to shop until the last minute, and this year there is probably more of that than usual. People are being more judicious about how they’re spending their money. I think Monday [today] will be good. Hopefully softness in November will be compensated for in December.”

On eBay on Black Friday, the hottest consumer electronics products were the Garmin Nuvi GPS and iPod Touch. The most searched for product on eBay across all categories was the Nintendo Wii console, 3,171 of which sold on the site. Following that was the Nintendo Wii Fit with 1,059 sold on the site.

Meanwhile, there’s some debate about Cyber Monday [today] and whether sales online will soar. L&T’s Hoffman said that when he was running Neiman Marcus Direct, he never really noticed much of a spike. He thinks it may have been more valid when people had less faith in Internet companies being able to deliver goods on time for Christmas. He expects a surge online around the Dec. 10 to 15 period, with ordering steady up to Dec. 21.


Jim Wetzel, co-owner of Jake, a men’s and women’s specialty store with locations in Chicago’s Gold Coast and suburban Winnetka, said he was “shocked” and “encouraged” by brisk Black Friday business. “We haven’t seen these kinds of crowds in a year,” said Wetzel, who noted that his sales were up about 5 percent. “It was like someone flipped a switch and said it’s OK to shop again. People were having fun and getting into it. Sale was the magic word.”

Ikram Goldman, owner of Ikram, on Chicago’s Rush Street, said she encountered an equally festive vibe among customers. “There were so many people out this weekend and people are really hopeful with the new president. In Chicago, people are so excited about this man. There’s a sense of safety with him.”

For Gus Mayer, based in Birmingham, Ala., with a Nashville, Tenn. store, “Business was quieter this year, with sales down 25 percent,” said Herman Heinle, president. “We planned 20 percent down, so it was about what we expected.” Fur sold well, boosted by a “no sales tax” promotion. Women’s bridge separates and sportswear were also strong, including cashmere sweaters by Magaschoni and separates by Elliott Laruen. Designer departments were the weakest area, Heinle said, with luxury customers reining in spending due to a combination of stock market losses and guilt over lavish spending, given the current economic situation, he speculated.

Kitson owner Fraser Ross opened his newest store on Black Friday at Caruso’s Americana at Brand.

Ross conceded that the timing of the Glendale opening was shaky — with a large store on Melrose Avenue just around the corner from his well-known Robertson Boulevard location to open next week, too.

“It’s a bloodbath; the majors are putting specialty retailers out of business. Women’s clothing simply cannot sell at full price,” Ross said. “My staff knows, when a girl 14 to 22 comes in the door, treat her like the Queen of England. They’re spending the money.”

Bright spots, Ross said, were jewelry and accessories, with Nicole Richie’s new line projected to do $250,000 for the stores by the end of December.

Gina Zangrillo, president of Darien Sport Shop in Darien, Conn., refused to break price. “We’re probably the only store in America which has taken the position not to go on sale,” she said. Instead, the store has aligned itself with a different charity each weekend during the holiday season. This past weekend was the Mikey Czech Foundation which raises awareness and funds for pediatric brain cancer.

“Traffic is down, but this weekend is typically an electronics focus,” she said. “We’re serving hot cider, providing great service and have caroling for customers who are coming in.” Top performers so far this season include Uggs as well as scarves and gloves. “This is going to be a big accessories year,” she said. “People may not pick up a new coat, but they’ll buy a cashmere shawl or a fur-lined scarf.”


Deborah Harvison, vice president of mall marketing for Simon Properties mid-Atlantic region, said that, based on late Friday reports, “overall, we won the battle. Malls are holding their own.”

A spokesman for Simon Property Group said consumer electronics were strong sellers. Both Gamestop stores at the Mall at Rockingham Park, Salem, N.H., were filled with customers and the Apple store was busy with shoppers buying iPod Nanos and MacBooks. Brookstone beat their sales objective by noon.

At the Burlington Mall, in Burlington, Vt., “Apple is offering discounts today, which is new for them,” the Simon spokesman said on Saturday. “Foot traffic is high on a sunny day with temperatures at 60 degrees. Shoppers are taking advantage of Simon’s Rejuvenation Stations at the malls, which offer free coffee, chair massages and hand massages.”

Rampant discounting lured more shoppers to NorthPark Center in Dallas over the weekend, and many stores made or exceeded their plans, according to Chris Szalay, mall marketing director. “The guesstimate is our traffic was up probably 20 percent Friday and maybe 7 or 8 percent Saturday,” she said. “There is no question that Friday was an amazing day.…If people keep shopping this week I think it will tell a lot more about what’s happening in the industry than what happened this weekend. I can tell you the Nasher [Sculpture Center] store at NorthPark tripled its sales from last year and that is a luxury gift, very unique.”

At Perimeter Mall, a large regional center just north of Atlanta, Black Friday traffic and sales were “equal if not greater than last year, exceeding expectations, given the economy, with parking lots and decks 95 percent full by 1 p.m.,” said Dennis Kemp, general manager of the property, which is owned by General Growth Properties. Cosmetics, premium denim, cashmere sweaters, scarves and lingerie were the best-selling categories, said Kemp. He said Macy’s and Nordstrom were “exceedingly strong.”

Kemp said, “I suspect customers should shop earlier than later because of retailers being very selective in the depth of their inventory offerings this season.”

Taubman’s Beverly Center in Los Angeles reported that although sales were less brisk than Friday, stores surveyed on Saturday were trending anywhere from flat to high-single digit gains. The Shops at Willow Bend in Plano, Texas, did well with skinny jeans, boots, Wii, home products and jewelry, as well as apparel and electronics






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