By David Moin
with contributions from Lisa Lockwood, Sharon Edelson
 on November 24, 2015

It’s a holiday season rife with concerns and new dynamics, from tepid fall consumer spending, tourism declines and rampant price slashing, to keeping malls and flagships secure in the wake of the Paris tragedies. Then there’s the mounting backlash against retailers opening stores on Thanksgiving Day.

What’s also weighing heavy on retailers’ minds, especially those heavy into fashion, is how consumer spending has shifted toward higher-ticket items, such as autos, home appliances, dining out, vacationing and other types of experiences — and away from buying clothes. Potential bestsellers for holiday: toys, active and ath-leisurewear, boots, wearables, gaming software, appliances, big-ticket items and drones.

The most recent reports and surveys suggest business will be on the soft side this holiday weekend since retailers launched Black Friday sales earlier this month. The season overall may be helped by low gas prices, higher disposable incomes, favorable weather ahead and sharper pricing, which could drive traffic. Retailers are also providing greater service to make shopping easier, like pick-up stations inside stores for online orders, free shipping and expedited checkout processes. The National Retail Federation reported that 56.6 percent of holiday shoppers began holiday shopping in early November this year, up from 54.4 percent in 2014, and that holiday sales will increase 3.7 percent to $630.5 billion, which is significantly higher than the 10-year average of 2.5 percent, though a decline from the holiday sales gain in 2014 of 4.1 percent.

Still, as Linda Chang, vice president of merchandising at Forever 21, told WWD: “Black Friday is always a big sales driver for Forever 21. With our holiday collection having launched earlier this month, and Black Friday being the true start of holiday shopping in the U.S., this is always an exciting time for us both in our stores and online. This season, in addition to in-store deals, we are giving away Black Friday ‘mystery gift cards’ valued up to $100 to the first people in line at all of our stores nationwide. Not only will customers be able to purchase items at a great value, but this provides more incentive to come and shop early in our stores this Black Friday.”

“Our retail stores will open on Friday ready for the season,” and stay closed Thanksgiving, said Claudio Del Vecchio, chairman and chief executive officer of Brooks Brothers Group Inc. “We are very happy with the product assortment we have in our stores, and from a promotion standpoint, we are consistent with last year. We are in a good inventory position.”

The TJX Cos. also exhibited optimism for the season. “We believe that value continues to be very important to consumers and we plan to deliver outstanding value in our stores and online businesses. We’re confident our gift-giving selections will be better than ever and we look forward to showcasing fresh gift assortments throughout season,” said a spokeswoman.

With the challenging climate, Macy’s Inc., which said its third-quarter comparable sales slid 3.6 percent, has lowered its guidance for full-year earnings to $4.20 to $4.30 a share, from prior guidance of $4.70 to $4.80 a share. And on Tuesday, said it’s pumping up holiday savings for an additional eight straight days beginning Nov. 28 with new deals being offered as often as every five minutes at Among the deals being offered at various times, the Amazon Cloud Drive with one year of unlimited photo storage for $1, and the Amazon Cloud Drive with one year of unlimited everything storage for $5, as well as an LG Electronics 60-inch television for under $700, and $100 off a Philips Fidelio noise-canceling headphones.

“Retailers are offering special incentives such as free shipping and merchandise discounts to entice consumers well in advance of Black Friday, reinforcing that the holiday shopping season is no longer a onetime event confined to the weeks between Thanksgiving and Christmas,” said Michele Dupre, vice president of retail, hospitality and distribution, Verizon Enterprise Solutions.

“Although consumers may have been slower to respond to this newer industry strategy, due to factors such as milder temperatures which kept people outdoors longer into the season, recent plunging temperatures in many regions, ‘decking of the halls’ and the approaching Thanksgiving holiday is shifting mind-sets, signaling that it’s ‘game on’ for retailers.”

Online shopping apparently has not picked up much yet, and could be down this week. The Verizon Retail Index showed that last Monday, average daily wireline traffic for online shopping in the U.S. was 5 points below 2014 levels for the start of Thanksgiving week, although traffic over last weekend was more in line with 2014 levels. The index is based on traffic data attributed to consumer shopping activity from the company’s networks.

Retail analyst Walter Loeb also exhibited some optimism. “The fact that it got colder and that there is pent-up demand means Black Friday could see very strong shopping. I expect sales between 3 and 5 percent up for the weekend. The strongest day will be Friday and the weakest day may be Saturday or Sunday.”

But like many others, he’s upset with stores that will be open Thanksgiving Day, particularly those opening in the afternoon, such as J.C. Penney Co. Inc., which opens at 3 p.m. That’s three hours ahead of Macy’s. “It destroys the sanctity of the holiday,” Loeb said. “It’s bad enough to open at 5 or 6, but at least then you can have dinner. I can’t tell you how many comments I have received about people really objecting to it.” Penney’s, however, has stated that many of its associates volunteer to work the holiday for the extra pay, this year receiving double time.

Several stores have stressed that they will remain closed Thanksgiving Day. REI, in a curious move, ran ads boasting that it will be closed Black Friday, when everybody else is open. REI is also closed Thanksgiving.

Costco, Home Depot, T.J. Maxx and Sam’s Club have decided to stay closed on Thanksgiving, reversing past policies, and Nordstrom, Tiffany, Saks Fifth Avenue and Neiman Marcus and are among those closed Thursday, as well, but open Black Friday. Wal-Mart shifted its opening time to 6 p.m. on Thanksgiving, after years of moving the start time earlier, and Maurices decided this year to keep as many stores closed Thursday as possible. David Jaffe, ceo of the parent Ascena Retail Group, previously indicated that some locations are required to stay open because of agreements with landlords.

On the other hand, Old Navy is making the most of Thursday, with Black Friday sales commencing at 4 p.m. and 50 percent off the entire store through Friday. The first 50 shoppers entering Old Navy stores on Thursday can get into a contest to win $1 million. On Saturday, the entire store is 40 percent, and on Sunday and Monday, known as Cyber Monday, the value retailer will offer 40 percent off online purchases.

TJX has been running a TV commercial touting that it’s closed Thanksgiving Day and encouraging customers to enjoy the holiday with their families. “Similar to years past, T.J. Maxx, Marshalls, HomeGoods and Sierra Trading Post stores will be closed on Thanksgiving and are scheduled to open on Friday morning, Nov. 27. We consider ourselves an associate-friendly company and we are pleased to give associates the time to enjoy Thanksgiving with family and friends,” said the TJX spokeswoman. On Friday, most Marshalls and T.J. Maxx stores across the U.S. are scheduled to open at 7 a.m. HomeGoods stores will open at 7 a.m. and Sierra Trading Post stores will open at 6 a.m.

Another ray of optimism came from Deborah Weinswig, executive director of the Fung Business Intelligence Centre Global Retail & Technology. “Economic fundamentals bode well for the season, with gas prices down 27 percent from 2014, giving an average of $700 of additional income to U.S. households, per capita disposable income up 2.8 percent and unemployment at a seven-year low,” Weinswig wrote in a report this week. “The weather largely is cooperating as well, with cold and dry conditions in the West driving demand for seasonal goods, while dry, but warmer weather in the East will support foot traffic. Additional dollars in shoppers’ pockets might benefit different categories of Black Friday sales, as we see consumers increasingly spending more money on travel and dining experiences, big-ticket home items and beauty products.”

Weinswig said a combination of consumer behavior and monthlong promotions has led to some early holiday shopping, siphoning sales from the Black Friday period. Weinswig also noted that the backlash against some retailers opening on Thanksgiving would be a factor. “Overall, the dominance of Black Friday single-day sales continues to wane as retailers spread their Black Friday promotions throughout the Thanksgiving weekend and emphasize deals throughout the entire month of November,” Weinswig wrote.

Randy Konik of Jefferies Americas, based on a survey taken by the company, characterized Black Friday discounts as “slightly more aggressive than last year, driven by discounts at apparel retailers.”  The analyst believes Best Buy will be the top performer for holiday, though holiday sales industrywide are seen by Jefferies as decelerating this year to 2.5 to 3 percent growth versus 4.3 percent growth last year. According to Jefferies, Kohl’s average discount is up 15 percent; Macy’s is up 9.5 percent, and Penney’s is up 19.9 percent. “This compares to the total group of broadline and hardline retailers that we studied, which is up on average about 2 percent and Wal-Mart, which is down slightly,” Konick indicated.

“Beyond the 71 percent of consumers who are excited for the holiday season, the dynamics driving this year’s shopping season are very different from those in the past,” Marshal Cohen, chief industry analyst of The NPD Group Inc., wrote in a blog. “At the end of October, two-thirds of consumers told NPD that they planned to take advantage of holiday sales this year and those sales have been plentiful since the first day of November. Despite the pre-Thanksgiving holiday deals and the continuation of many stores opening on Thanksgiving Day, Black Friday hasn’t faded away, though it is graying.”

Weather-wise, it won’t be bad for the Northeast, but central U.S., according to AccuWeather, will get hit by soaking rain, snow, cold winds and possibly even ice on Thanksgiving Day. The storm will center at the collision point between warmer air surging across the Eastern U.S. and chilly air gripping the West and plunging southward through the plains, AccuWeather said. The result will be for a large swath of rain and snow to unfold with the potential for a narrow zone of ice separating the two. “There will be heavy rain across most of Oklahoma, eastern Kansas and western Missouri,” stated AccuWeather meteorologist Steve Travis.

“New York City might be warmer than Los Angeles,” said Evan Gold, senior vice president of client services at Planalytics, which analyzes the impact of weather on businesses. “All the cold-product categories will do better in the West than the East. Overall, it’s been a pretty negative fall for most eastern markets with heavy coats, hats, gloves and winter boots [languishing]. It will be a great opportunity for consumers with a glut of inventory and highly promotional retailers.”

Last Thanksgiving, temperatures in the Northeast were in the 20s and 30s Fahrenheit. High temperatures for this year’s holiday are expected to be 10 to 15 degrees above average and 20 to 30 degrees higher than Thanksgiving 2014.

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