The unofficial start of the US Christmas shopping season kicks off with ‘Black Friday’ today (26 November) – and retailers across the country have left little to chance to try to ensure the recent momentum in top-line sales will continue through the weekend and into the holiday period.
Typically, merchants try to keep their deals quiet until a day or two before Black Friday, but this year sales promotions have been in full swing as firms try to persuade early spenders to open their purses. Longer opening hours – including many doors unlocking on Thanksgiving Day itself – deep discounts and online deals are all part of the plan.
“The rules for Black Friday have changed significantly,” explains Matthew Shay, president and CEO of the National Retail Federation.
“Instead of waiting until Thanksgiving Day to announce their promotions, many retailers are getting shoppers excited about Black Friday by offering sneak peeks of deals in advance, using social media to create buzz, or teasing upcoming deals on their websites.”
Kolh’s, Kmart, Target, Gap, Old Navy and Banana Republic stores were among those open Thursday, with Sears pushing out the boat to open its doors at 4am.
Turn in a profit
The term Black Friday is thought to refer to the beginning of the fiscal period in which retailers move into the black or turn a profit for the first time. Of course one day is not going to make or break the fate of most in the retail sector, but there’s a lot riding on fourth quarter performance, and holiday sales as a whole, so it’s going to be an important gauge of people’s willingness to spend.
The NRF expects up to 138m people to shop Black Friday weekend (Friday, Saturday and Sunday) – up from the 134m people who planned to do so last year.
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According to a survey carried out on its behalf by BIGresearch, around 60m people say they will definitely hit the stores while another 78m are waiting to see if the bargains on offer make it worth braving the cold and the crowds.
For many retailers, though, early discounting and free shipping deals began around the Halloween weekend and continued to pull in shoppers in the first half of November. A special promotion at JC Penney saw 60% cut off selected items, while rival Kohl’s held a three-day “Power Shopping Sale.”
There’s no doubt retailers want to make it as easy as possible for consumers to spend money this year.
While the NRF expects holiday retail sales to be up just 2.3% to $447.1bn, that’s a marked improvement on last year’s barely-there 0.4% uptick and the 3.9% drop the industry saw in 2008.
And with unemployment rates remaining high and economic turbulence continuing, retailers desperately need a strong Christmas season to help boost profits.
Many industry players also elevated their inventories in preparation for the holidays and analysts argue that retailers must win sales early in the season to limit steep profit-eroding discounts later.
Another “holiday headwind” for traditional store retailers is the growing popularity of online retailers, where discounted deals take consumers away from the stores and on to the Web. Indeed, Forrester Research predicts that online retail sales in the US will grow 16% in this holiday shopping season compared to last year.
But rather than being deterred by this trend, savvy retailers are leveraging the power of the Internet to lure shoppers into the malls. Special emails, Facebook, Twitter and their own home pages will be used to impressive effect to entice customers with Black Friday deals.
Retail giant Wal-Mart has taken things a step further with its ‘Crowdsaver’ app on Facebook, where a deal is only unlocked if enough people express an interest.
While the ‘Shopkick’ mobile app works with retailers including The Wet Seal, Target, American Eagle Outfitters, Macy’s, and Sports Authority to reward shoppers with in-store gift cards or discounts simply for turning up in the stores. The rewards get higher if shoppers scan products or check-in during special promotional periods.
And athletic wear retailer Finish Line is participating in Google’s new Local Availability feature which lets mobile and desktop users search for items they want and see immediately if a retailer has the items in stock at a store nearby. It even provides directions to the store.
As if that’s not enough, it all kicks off again on “Cyber Monday,” the Monday after Thanksgiving, when the next round of special promotions swings into action, with many retailers planning one-day sales and free shipping on all purchases.
While Black Friday is seem as a good gauge of consumer sentiment, the reality is that the Thanksgiving weekend represents just 10% of total holiday shopping volume. Which means there’s still a lot of work still to do to ensure the remaining 90% lives up to expectations.