Black Friday isn’t what it used to be.
Once considered the kickoff for holiday gift shopping and a bellwether for the season, retailers now see less volume potential on the day and don’t read as deeply into the results.
This year, enthusiasm has waned and retailers have themselves to blame, at least partially, for the new reality. They’ve already blitzed consumers with pre-Thanksgiving deals and doorbusters, thereby extending the holiday season, and they’re keeping their doors open on Thanksgiving Day in record numbers, sucking some wind out of the next day and the weekend.
The bigger picture is that business has been erratic for fall so far, with shoppers generally holding back, becoming more selective than ever, and feeling cash-strapped despite lower gas prices as they contend with rising food and health costs.
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Up to now, there’s been a ton of maneuvering. Retailers have accelerated markdowns and unleashed new sales ploys and services, from free deliveries [even same-day in some cases] to faster checkouts and buying online for store pickup. It’s all about capturing market share, beating last year’s numbers at least by a point or two, and not relying so much on any particular day, be it Black Friday or Cyber Monday, to set the momentum.
So what’s to be expected from this Black Friday? Another big but comparatively modest turnout in the malls, judging by retailers and analysts who aren’t particularly bullish. Between Thursday, Friday and the weekend, retailers do hope to make up some lost sales following the blizzard last week clobbering the Midwest and part of the Northeast, and this week’s rapid warm-up.
“If we get a good dose of cold weather it will go a long way,” said Tony Spring, Bloomingdale’s chairman and chief executive officer. “We have done all we can do at this point,” Spring said, adding that he believes Bloomingdale’s bought the right merchandise for the season. “We’re feeling pretty good about the holiday season overall.”
“We are very prepared,” said Kathryn Bufano, ceo of The Bon-Ton Stores Inc. She said the regional department store chain is offering strong items, is in a better stock position than a year ago and has a stronger marketing program.
But the business has been flat and below what was expected. “Our Charity Day in the second week of November and the week of Veteran’s Day were very good weeks, but this past week has been a little soft,” Bufano said. “To say it’s been up and down all season is an understatement.” The week or so preceding Black Friday, Bufano observed, “a couple of years ago was pre-shopping or browsing. It’s accelerated to actual buying and it’s snowballed to earlier than ever.”
“We feel the anticipation and buildup surrounding Black Friday is not near where it was a few years ago, especially as retailers kept Black Friday deals under wrap. Now Black Friday has become Black Monday, Tuesday, Wednesday and Thursday,” said Jennifer Black of Jennifer Black & Associates. “Black Friday is upon us, and the hype surrounding it has begun to peter off. More and more consumers are taking to the ’Net to do the majority of their shopping and we believe the average consumer has started the bulk of their holiday shopping much earlier than the traditional Black Friday kickoff. We have, however, seen traffic at the malls begin to pick up over the last several weeks in anticipation of Black Friday and retailers implementing their Black Friday deals much earlier.”
On Tuesday, ShopperTrak issued a statement that Black Friday used to reign supreme in volume and in-store traffic, but this year Super Saturday [the Saturday before Christmas] will be the biggest day on both counts, followed by Black Friday in terms of sales, and the day after Christmas in terms of traffic. Super Saturday sales reached $8.8 billion last year.
According to the International Council of Shopping Centers and Goldman Sachs’ chain-store sales index, sales for the seven days ended Saturday rose 1.7 percent over the year-ago period but logged a 2.2 percent increase over the prior week. The latter mark is the strongest sequential gain for sales since they posted a 2.9 percent increase during the week ended May 31.
“Early Black Friday promotions helped propel sales on a week-over-week basis,” said Michael Niemira, research consultant for ICSC. “Weather was a bit of a mixed bag over the past week for retailers as colder weather got the consumer in the winter apparel mind-set. However, extreme weather in some parts of the country curbed consumers’ ability and desire to shop.”
RetailNext, the San Jose, Calif.-based retail metric monitoring service, expects brick-and-mortar retail traffic to be flat to slightly down during the four days beginning on Thanksgiving, with sales up 2 to 3 percent based on increases in conversion (up 1 to 2 percent) and average transaction value. Shelley Kohan, vice president of retail consulting, said the expectations are based on a slow start to business in the early part of November and, in some regions, the onset of wintry weather early in the month leading to pent-up demand.
Based on data on customer store visits and buying behavior, RetailNext expects sales for the November-December period to be flat to down 1 percent, an improvement over last year’s 3.6 percent decline, with a smaller decrease in traffic (down about 4 percent versus a 6.5 percent decline last year), a move to an increase in conversion (up 0.5 percent from down 0.2 percent) and a larger increase in average transaction value (up 3.5 percent versus up 2.4 percent).
Standard & Poor’s predicts a 2.5 to 3 percent gain in holiday 2014 sales, including general merchandise, clothing, furniture, electronics, sporting goods, hobby, books and office supplies, but excluding auto and food sales. That compares to the 3.3 percent average since 1992, and last year’s meager 0.87 percent gain. There’s a sense that consumers have been foregoing smaller-ticket items, in favor of home and automotive.
There are concerns that if the upcoming Thanksgiving weekend disappoints, retailers will get desperate and trigger unplanned promotions quickly. As Kay Krill, ceo of Ann Inc., told WWD last week, “Everybody is gearing up for this one to be the most promotional [season]. I’m hoping we don’t have to go deeper than we are planning.” About one-third of the malls will be open on Thanksgiving, versus about 10 percent a year ago, Krill estimated.
Macy’s, Nordstrom, L Brands, Michael Kors, Under Armour, The North Face, Uniqlo and Costco are among the brands and retailers seen faring better than most, while teen, mass and moderate chains such as Sears Holdings Corp. and Abercrombie & Fitch Co. are not expected to turn in strong performances. Wal-Mart Stores Inc. and Target Corp., coming off a bad 2013 holiday run, should do better and receive a tailwind from lower gas prices. Neiman Marcus and Saks Fifth Avenue should fare OK with the stock market up and affluent customers feeling rich.
AccuWeather reported on Tuesday that a storm with rain and heavy snow will cause major disruptions and delays for Thanksgiving travel on the East Coast and in the Appalachians. A change to snow will take place from west to east from northern Virginia to New England. That doesn’t bode well for retailers open on Thanksgiving, but online business could make up some of the shortfall. AccuWeather also reported ice and snow will create slippery travel for some northern states on Black Friday, but the weather will cooperate for shoppers over most of the nation. Cities with potential icy spots include Boston; Portland, Maine; Albany, N.Y.; Hartford, Conn.; Harrisburg, Pa., and Martinsburg, W.Va. Most road surfaces should have dried off around New York City, Philadelphia and Washington in the wake of the Wednesday storm, but icy spots are possible in the northern and western suburbs created from the piles of snow left behind.
Forrester predicts that online sales will account for 14 percent of all holiday retail and reach almost $90 billion this year — a $10 billion increase from last year. But the online world, like the brick-and-mortar world, expects Black Friday to be less of an event this year as price promotions kicked off even earlier than prior seasons. Amazon deals, for example, started on the first of the month.
According to a statement from Google, “the frenzy of Black Friday is no longer confined to a single day” and has become a monthlong shopping event. Per search trends on Google, insights from Google Consumer Surveys and Google Express’ top trending purchases, it will be the most mobile season to date. Google search activity for “Black Friday,” across the U.S. specifically, is most situated in Omaha, Neb.; Louisville, Ky.; Nashville; Augusta, Ga., and Westland, Michigan.
Game consoles and tablets are the top gifts trending on Google Shopping, and wearable technology is gaining steam. Among the most popular apparel searches are weather-related items like Hunter boots and Canada Goose jackets. Searches for jogger pants have gone up 39 percent since October. Toys like Ouija boards and My Little Pony are trending as well, the former seeing a 300 percent spike since October due to the release of the movie “Ouija.”
ShopRunner found that 57 percent of its customers started online holiday shopping before Thanksgiving, with 52 percent planning to shop for themselves (one-fifth of these consumers will buy items that retail for $1,000 and up).
“We’ve invested in an even easier, convenient customer experience,” said Will Setliff, executive vice president of marketing at Kohl’s Corp., referring to Kohl’s improved app, which was recently relaunched. “We know that mobile technology is more important than ever. The mobile app enhances the experience for browsing, shopping and managing savings offers.”
Even though consumers weren’t as confident this month compared with last month — the Consumer Confidence Index fell to 88.7 from 94.1 in October — Lynn Franco, director of economic indicators at The Conference Board, said in November, income expectations were “virtually unchanged and gas prices remain low, which should help boost holiday sales.”
Susan Anderson, analyst at FBR Capital Markets & Co., said she’s expecting that “heightened promos will be required to drive sales this Black Friday…With another short holiday shopping period, we expect retailers to fight for share of early traffic amidst the continued secular decline in mall traffic.” Anderson noted that “Black Week,” as FBR called it last year, began earlier this year, with retailers such as Gap, Banana Republic, Old Navy and Aéropostale starting promotions this past weekend.
Sterne Agee’s Ike Boruchow said Thanksgiving hours will “cannibalize Black Friday sales, rather than creating incremental opportunities.”
Standard & Poor’s retail credit analyst Robert Schulz said, “Sales may rise, but margins will depend on retailers’ inventory positions, the cadence of their promotional activity and how they handle consumers’ burning desire for discounts.”