Retailers rode a Thanksgiving high, then quickly lost some steam through the rest of the kickoff weekend of the key holiday shopping season.
This story first appeared in the December 2, 2013 issue of WWD. Subscribe Today.
The widespread momentum seen Thanksgiving Day — when many stores opened for the first time or earlier than a year ago and unleashed an avalanche of doorbusters and savings — didn’t spill into Black Friday, when shopping dissipated. Retailers cited modest increases overall for the Thursday to Saturday stretch, and expressed uncertainties about the holiday shopping ahead while still being hopeful for some gains.
“There’s no question: Thursday openings dragged business out of Friday. Friday morning was very quiet,” observed Bill Taubman, chief operating officer, Taubman Centers Inc. “If you look at Thursday and Friday together, things were up a little, in the low single digits. Saturday was sort of flat-ish.”
“You have to look at the last week and the month of November,” said Michael Gould, chairman and chief executive officer of Bloomingdale’s. “We are very satisfied. We didn’t forget the impact of [Superstorm] Sandy last year. Because of Sandy, Thanksgiving week last year was the first time people got back in the swing of things.” The earlier Hanukkah, commencing a day before Thanksgiving this year, also helped the month’s business, Gould added.
“I think the bottom line was you had to be open for business, even if, at the end, it was just a transfer of business,” observed Brendan Hoffman, president and ceo of The Bon-Ton Stores Inc., of the earlier Thursday openings. “It remains to be seen if it’s overall positive.”
“Clearly Thursday borrowed from Friday,’ said one former retail ceo who requested anonymity. “Friday didn’t have the sense of urgency. Thursday and Friday combined were OK. There was an increase — not a big increase.”
“Thursday night was much stronger than Friday. Retailers in the future will have to beef up their Friday morning specials,” said Britt Beemer, chairman of America’s Research Group. “Consumers were very disappointed in those early-bird specials.”
Retailers have reasons to still be hopeful. Like Bloomingdale’s, many saw business picking up in late October and into November, and experts said having six fewer days from Thanksgiving and Christmas compared to last year won’t make much of a difference. People will spend whatever they’ve budgeted for gifts, regardless of the time frame.
As of now, industry forecasts remain intact, calling for holiday 2013 sales to increase from over 2 percent to under 4 percent, with business buoyed by burgeoning online and mobile shopping; a healthy home sector, an improving women’s apparel business, even in sportswear which has lagged for years, and the strong stock market. Moreover, gas prices have come down.
“That’s not quite as much as a pressure point for the consumer as it was a couple of years ago, but it seems to me that people’s reluctance to spend with uncertainty in the job market is an important consideration,” said Lawrence Tanenbaum, president of the Keene specialty chain in California.
Thursday was unbelievable,” said Kathryn Bufano, president and chief merchandising officer of Belk Inc. “Last year, when we opened at midnight, we had huge crowds. This year, we opened at 8 and those first four hours significantly outpaced last year. The customers really loved shopping at 8. There were tons of college people, young people, mothers, daughters, families — a very broad spectrum. All of my competitors were busy. We gave back some business on Friday, which was certainly to be expected, but for the two days combined we still beat our plan,” she added. “This is no final victory by any means. One less week is going to be an issue.”
For the Canadian-based Hudson Bay Co., the situation was different. Thursday wasn’t as strong as Friday because Canada’s Thanksgiving is in October, but HBC planned big for Black Friday, promoting its Hudson’s Bay stores as aggressively as its Lord &Taylor stores in the U.S.
“Our entire Hudson Bay Enterprise for Black Friday was up 15 percent in comp sales,” Richard Baker, the chairman and ceo of HBC, told WWD. “Traffic across the border to the United States used to be huge. Now it’s not. Canadians are staying in Canada to shop so this was pure additive business for us.”
Baker was less bullish about Thursday’s business, calling it good. Consumer purchasing, he said, continues to happen later in the year.
Target was also more upbeat than most. “It was a great start,” said the discounter’s chief marketing officer, Jeff Jones, of Black Friday. “It’s been a difficult period for consumers. They’re not feeling completely confident yet. We knew we had to deliver for the guest.” Jones said some units had 500 to 600 people camping out waiting for doors to open 8 p.m. on Thursday evening.
Neiman Marcus Group appeared to take a conservative approach. “We didn’t add any additional hours” to the holiday schedule, said president and ceo Karen Katz. “We ran exactly the same number of promotions. We were not any more promotional. Inventories are in good shape.”
On another positive note, retailers this month have been reporting improved conversion rates because consumers are pre-shopping online and therefore often know where to shop and what to shop for before arriving in store. Reserve programs, enabling people to purchase and pick up products in the store to take home after they’ve selected them online, are gaining popularity. That’s helping stores like Gap and Macy’s.
“Consumers increasingly research products online before entering stores. When they arrive, customers know exactly what they want to buy. Retailers now need to make their experience a satisfying one,” said Bill Martin, founder of ShopperTrak, the Chicago-based traffic counter.
ShopperTrak estimated that traffic for Thanksgiving Day and Black Friday, combined, was up 2.8 percent and sales rose 2.3 percent to an estimated $12.3 billion. On the other hand, on Black Friday, store visits fell 11.4 percent and sales declined 13.2 percent.
According to Craig Johnson, president of Customer Growth Partners, the next couple of weeks could be bleak. “This is going to be the worst lull ever, from Monday to the middle of December.” But on Saturday, Dec. 14, “things will pick up again,” Johnson predicted. “The biggest shopping day will almost definitely be Saturday, Dec. 21. It’s ideal because it’s four days before Christmas and people are not yet traveling as much.” As far as the last four days of shopping, “It was a classic case of demand pull-forward,” Johnson said. Shopping from Thanksgiving to Christmas is becoming “hollowed out,” Johnson said, with sales pulled forward from the first half of December into November, and also with more business expected in the week after Christmas, with clearances.
Today, Cyber Monday, is expected to be strong again, with significant shopping though without the huge gains of recent years since promoting and spending online have been more spread out in November. “I don’t think it will be that big of a deal. It will be OK,” Beemer predicted.
A survey conducted by Prosper Insights & Analytics over the weekend for the National Retail Federation projected more than 131 million people, or 54.8 percent of those surveyed, plan to shop online Cyber Monday, up slightly from last year’s 129 million. Matthew Shay, NRF’s president and ceo, said retailers held back their best deals of the year for Cyber Monday. Nearly 19 percent of shoppers surveyed, or 24.8 million people, said they will shop on their mobile device, a 22 percent rise over the 20.4 million last year and a jump from the 3.7 million who shopped that way in 2009.
On Thanksgiving weekend, according to the NRF, the average customer spent $177.67 online or nearly 44 percent of their total holiday budget, up from 40.7 percent last year, and those online purchases were 3 percent higher than a year ago.
Comscore reported that Black Friday became the first billion-dollar online desktop shopping day this year, with $1.2 billion in e-commerce spending. (This number doesn’t include mobile.)
Adobe Digital Index said that 24.2 percent of online sales came from smartphones and tablets on Thanksgiving, with 15.6 percent of sales from tablets and 8.6 percent from smartphones.
IBM reported that Thanksgiving Day and Black Friday saw increases in online sales of 19.7 and 18.9 percent, respectively, with the most significant surge resulting from mobile. Mobile traffic ballooned to 39.7 percent of all online traffic, and mobile sales comprised 21.8 percent of all online sales, a 43 percent increase from 2012. The top five most visited sites on Black Friday were Amazon, eBay, Wal-Mart, Best Buy and Target, with consumers based in New York City the most avid Black Friday online shoppers, followed by Atlanta, Los Angeles, Washington, D.C., and Chicago.
On Thanksgiving Day, eBay Enterprise, which powers e-commerce for brands including Polo Ralph Lauren, Sports Authority, Levi’s and Toys ‘R’ Us, saw a 130 percent increase in visits from mobile devices and a 127 percent increase in mobile transactions year over year. On Friday, the amount of consumers accessing the platform or platforms via an eBay Enterprise partner increased by 96.5 percent and mobile orders grew 89.2 percent from Black Friday in 2012. Seventy-two percent, and 65 percent of orders had free shipping on Thanksgiving Day and Black Friday, respectively.
On the men’s wear front, at Brooks Brothers, Lou Amendola, chief merchandising officer, said the company posted a single-digit increase for the holiday weekend and that the numbers were not up to plan. “For the last two years, we didn’t have an increase for the Thanksgiving weekend,” he said. “So with the calendar shift and Hanukkah coming at the same time, we had higher hopes. But they didn’t come to fruition.”
Amendola said promotional activity was on par with prior years and Brooks Brothers opened at the same time, with the outlets jumping into the fray Thanksgiving night. “We had higher expectations for the outlets in particular,” he said. “People shifted their pattern to shop earlier, but there was no additional business due to the additional hours. So from a profitability standpoint, you ask yourself, ‘Was it worth it?’”
Brooks Brothers saw no particular merchandise standouts. Sales were very “democratic. Everything performed at the same rate,” Amendola said. However, promotionally priced items drew the most interest. At Brooks Brothers outlets, shirts, sweaters and suits were on sale and customers stocked up. “People were buying gifts. They know Christmas is only three weeks away,” Amendola said. The season won’t be a disaster, but it won’t be record-breaker either, he said.
Neal Black, ceo of Jos. A. Bank Clothiers Inc., said, “This year we opened at 8 p.m. on Thursday, along with Macy’s and many others. We closed at 1 a.m. and then reopened at 6 a.m. on Friday.…In general, all the Thursday opening did was spread the business over more hours.” Black said the customer reaction shows “clearly there is a strong customer demand for the Thursday evening opening. The malls that we are in that are anchored by Macy’s were, for the most part, packed with customers from 8 p.m. until after 12. This really takes the wind out the early opening on Friday and I think opening Thursday evening is the new norm. It’s very promotional and customers are sharp; they know what the best deals are.”
Among the items that Bank was promoting were cashmere blazers for $179, down from $650; a leather jacket for $179, down from $750; merino wool or silk sweaters for $29.99, down from $99.50 to $145, and dress shirts and sport shirts for a three-for-$99 price. Black said given the tone in the market this year, he expects the rest of this holiday season to “remain promotional and to end up OK in spite of the six fewer shopping days.”
At other specialty stores, Bob Mitchell, copresident of Mitchells Family of Stores, said Thanksgiving weekend is generally one of the smallest weekends of the year for the company’s five upscale specialty stores. However, sales the week before the holiday were strong, leading to a midsingle-digit sales gain for the final two weeks of November.
“For our core customers, this is the time to bring in their relatives and the kids who are home from college,” he said. “We have no promotional activity, so we’re not really the choice of places to go.”
Even so, he said men’s luxury sportswear from Loro Piana and Brunello Cucinelli and women’s accessories and jewelry were the top sellers. Men’s sport coats, contemporary denim and dress shirts were also good, and the recent cold snap on the East Coast helped boost sales in outerwear.
“For us, the last 10 days will make or break the season,” Mitchell said. “Business keeps getting exponentially bigger. Clients are generally more optimistic, but we’re fighting other categories [such as home remodels and vacations] for what people spend their money on.”
Doug Wood, president of Tommy Bahama, said the chain moved up its traditional promotional offers this year. In years past, the company sent its gift guide after Thanksgiving, but this year sent it to over 600,000 people the first week of the month. The loyalty program’s $50 off a purchase of $100 or more went to 1.2 million people in the second week of November.
“Between those two things, it got our holiday business started earlier,” Wood said, “and they got us where we needed to be if not better than we had expected.”
Michael Feurer, president and ceo of Vanity, a 164-unit retail chain based in Fargo, N.D., said the widening of Black Friday hours appeals to shoppers across demographics. “There were two really distinct concentrations of business for our stores, between 8 p.m. and 2 a.m. in the morning, and then all day during Black Friday. The strength didn’t wane for us,” he said. “We are a twentysomething brand and there are a lot of folks in the Millennial band who look at shopping on Thanksgiving evening as something fun to do with friends, and then there are people with other priorities that come throughout Friday.”
At Styles for Less, Eric Senges, vice president of stores and operations, estimated the Anaheim, Calif.-based retailer’s Black Friday business was up over last year, which he attributed to additional store openings, from 40 last year to 70 of the chain’s 150 stores on Thanksgiving this year. Because malls and outlet centers, especially those with anchors like Macy’s and J.C. Penney, opened earlier, “I think it affected the mall traffic somewhat. I don’t think people were ready to come out that early on Thanksgiving. The business was spread out considerably this year starting with Thanksgiving all the way through the closing on Black Friday.”
Denim was a good performer at Pacific Sunwear of California Inc., according to president and ceo Gary Schoenfeld. “Cold weather certainly helped drive interest in sweaters, outerwear and fleece compared to last year, which was still quite mild at this time,” he said.
Looking ahead, Schoenfeld believes that Black Friday’s results don’t necessarily track with the rest of the holiday shopping season. “It’s an important start for the holiday season, but I don’t think it 100 percent predicts what will happen in December. The customer has plenty of places to choose from, but we continue to be confident in our assortment of brands and on-trend merchandising that we offer to our older teen and early 20s customer base,” he said.
Debra Gunn Downing, executive director of marketing at South Coast Plaza, indicated Black Friday sales could break records at the Costa Mesa, Calif., center. She pointed to South Coast Plaza’s “photo sales, our gift certificate sales and our valet — in fact, we had to close two of our valets because they were full to capacity.” Downing cited long lines at Apple, Lululemon, Louis Vuitton and Tory Burch.
Westfield’s 40 shopping centers in the U.S. were busiest midnight to 2 a.m. on Friday morning, and Friday afternoon. “The centers were up between 20 and 80 percent,” said Shaun Swanger, vice president of marketing and fashion. The 8 p.m. time slot brought out many families following their Thanksgiving dinners, while the midnight crowd drew a mostly younger crowd. “Between 3 a.m. and 6 a.m. was very quiet compared to last year,” he said.
Among specialty store chains, Swanger mentioned that those with promotions of 40 to 50 percent off everything attracted large crowds, including Express, Express Men, Gap, Old Navy, Banana Republic and Abercrombie & Fitch. Luxury retailers didn’t participate much in the discounting frenzy, but Swanger said, “People wanted luxury.…We noticed Michael Kors, for example, that opened at midnight and had 25 percent off offers did very well.”
Across the retailers, Swanger mentioned that electronics, and women’s apparel and accessories were standout categories.
Simon Property Group Inc. said most of its malls and outlet centers had crowded parking lots and long lines of customers at least one to two hours before 8 p.m. Traffic slowed during the early morning hours on Friday, but accelerated as the hours passed, with 11 a.m. to 3 p.m. the busiest period for many properties. On Saturday, traffic levels were similar to other busy shopping weekends, Simon added.
At Bloomingdale’s, fashion accessories, men’s wear and fine jewelry were standouts, followed by home and ready-to-wear. Belk said boots, home, better sportswear, fine jewelry, cosmetics, better handbags, designer handbags and men’s wear were robust.
Bon-Ton reported that the winners were men’s and women’s apparel, outerwear in both cases; cosmetics; and intimate apparel driven by sleepwear.
Target’s top deal, a 50-inch Element TV for $229, was gone in minutes. “We had TVs in shopping carts lined up so guests could get a cart with a TV and continue shopping,” Jones said. “I saw one family with four members, each wheeling a shopping cart with a TV like ducklings in a line.”
Electronics was a hot draw as well as bins of gifts at special prices, such as $5 pajamas and $5 Threshold blankets. Jones said bins emptied quickly.
Other promotions included spend $75 and get 20 percent off on Friday. “For Cyber Week, we’ll have 100,000 unique deals on target.com,” Jones said. “We’ll be driving traffic with TV [commercials] and all kinds of marketing channels. We’re in Cyberlife. Traffic to target.com and increases in mobile are absolutely here. We know we have to give guests the ability to shop the way they choose”
Wal-Mart cited “the most successful” Black Friday period in its history, despite protests at some stores by workers, unions and employee groups such as Making Change at Wal-Mart. A Wal-Mart Stores Inc. spokesman said, “Black Friday is a big stage and we’re one of the biggest players in the retail industry. We are not surprised that those trying to change our industry are using this platform to get their message out and we respect their right to be heard.” The spokesman said Wal-Mart believed hardly any of its associates were participating in the demonstrations. The discounter’s one-hour guarantee to have 21 items available was a “game-changer.” For this reason, traffic didn’t heat up until later in the morning. The stores opened at 6 a.m. In the past, there would have been crowds lined up by 4 a.m. for doorbusters. The spokesman characterized stores in the early hours as “crowded, but calm.” It instituted a one-in, one-out policy.
Susan Davidson, ceo of Scoop, said, “We did really well. We had double-digit increases in stores and over 200 percent increases online.” Scoop offered 25 percent off certain items. “Traffic seemed OK, but not great,’’ Davidson said. “Those who shopped, bought very expensive items such as outerwear.”
Bestsellers included down coats and jackets from Duvetica and Canada Goose, among other labels; women’s leather jackets, $500 on average for the Scoop brand; Helmut Lang leather leggings; men’s and women’s cashmere sweaters; boots, and dresses.
As for the rest of the season, “We’re taking a wait and see attitude,” she said. “Of course, there’s six fewer days. We’re keeping our pulse on what everyone else is doing.”
HOLIDAY 2013: KEY TRENDS
• Aggressive Thanksgiving Day tactics reap market gains but siphon Black Friday business.
• Price promoting breaks early, two weeks before season’s official start.
• Accelerating mobile and desktop shopping.
• Pre-shopping online abets brick-and-mortar; consumers know where to shop and what to shop for.
• Home category shines; men’s wear strong, women’s apparel picking up.
• Overall sales projected to increase between 2 percent and 4 percent.