Black Friday IPod Deals Show Stores Bowing to Buyers Amid 2% GDP: Retail

Every Black Friday, there’s a staring contest between retailers and shoppers over price. This year, the stores may have blinked first.

Chains such as Toys “R” Us Inc. and Gap Inc. (GPS) are opening earlier and offering more markdowns than ever on the day after Thanksgiving, said Mary Delk, a director at Deloitte Consulting. The result may be higher sales and lower profits for retailers over the holiday season.

“Consumer anxiety has resulted in a frenzy among retailers to compete for market share,” said Delk, who is based in Charlotte, North Carolina. “The inducements and deals are bigger and bolder.”

Wal-Mart Stores Inc. (WMT) is promoting a two-piece boys’ sleep set featuring Disney characters for $4.47. J.C. Penney Co. (JCP) will sell $18.88 digital music players and $30 kids’ camcorders. Black Friday shoppers who visit a Sears Holdings Corp. (SHLD) store will receive a coupon book with more than $3,000 in discounts.

Retailers are pouring on the deals to attract consumers grappling with 9 percent unemployment and a slower U.S. economic expansion than previously estimated. Third-quarter gross domestic product climbed at a 2 percent annual rate, down from a prior estimate of 2.5 percent growth, the Commerce Department reported yesterday in Washington.

Consumer spending, which accounts for about 70 percent of the economy, grew at a 2.3 percent annual rate, little changed from the 2.4 percent initial estimate.

On Oct. 30, the Bloomberg Consumer Comfort Index reached the second-lowest level in 26 years of data. Amid slumping confidence, customers at Best Buy Co., Gap and Toys “R” Us all said they would spend less this holiday season than last, according to a poll conducted last month by BIGresearch, a Worthington, Ohio-based researcher.

Industry Weakness

In another sign of industry weakness, October same-store sales at Limited Brands Inc. (LTD) and Target Corp. (TGT) trailed analysts’ projections for the first time this year.

Black Friday, so named because many retailers become profitable then, serves as the unofficial start to the holiday shopping season. Holiday sales may rise 2.8 percent this year, or about half of last year’s 5.2 percent gain, according to the National Retail Federation. The Washington-based NRF will release Thanksgiving weekend sales numbers on Nov. 27.

Toys “R” Us will open at 9 p.m. on Thanksgiving, an hour earlier than last year. The chain began bombarding shoppers with marketing emails and circulars a month ago -- the soonest ever, according to Chief Executive Officer Gerald Storch. Among the deals: a $50 giftcard with the purchase of a $199 Apple Inc. iPod Touch and such board games as Candy Land and Ants in My Pants for $4.99, or 50 percent off.

Shoppers who bought every item listed in a recent Toys “R” Us circular would save $12,500, compared with $11,000 last year, Storch said.

Very Aggressive

“We were very aggressive and needed to take it up a notch this year and offer products that weren’t just cheap but had value,” Storch said in a telephone interview from the chain’s Wayne, New Jersey, headquarters. “There is incredible pent-up demand from shoppers and we have to make sure that they don’t do their shopping without seizing some of our bargains.”

Mall of America, which can usually rely on its amusement park to attract shoppers, is ladling out more freebies this year. The largest U.S. mall will give away 300 prizes ranging in value from $25 to $1,000, said Julie Hansen, a spokeswoman.

The Bloomington, Minnesota-based mall, which typically attracts 300,000 people on Black Friday, is opening at midnight on Thanksgiving, the earliest in its 19-year history. Last year Mall of America waited until 4 a.m. before letting in deal- hunters.

3-D Goggles

Gap, which will have about 1,000 stores open on Black Friday, is distributing 3-D goggles at its Old Navy chain that allow shoppers to find “secret” discounts marked on certain merchandise. Some will get a free Eastman Kodak Co. (EK) digital camera with a purchase of $40 or more. Its namesake chain will offer $19 women’s jeans, while Banana Republic will offer 40 percent off all purchases.

As many as 152 million people will hit the stores on Black Friday, up 10 percent from last year, according to the NRF.

Still, retail executives are less optimistic about Black Friday sales than they were a year ago, according to a survey by BDO USA, a consulting firm based in Chicago. Sales may rise 1.6 percent, the average estimate of 100 executives in BDO’s survey conducted last month. That compares with a 3.8 percent increase in the survey last year.

The whole point of all the Black Friday discounts and door- busters is to get shoppers into the stores and entice them to buy full-price merchandise.

Making that happen is getting harder because more Americans have become mission shoppers, according to Bill Martin, the chief executive officer of the Chicago-based research firm Shoppertrak. Many consumers research what they want online, buy it and then leave, Martin said last month.

“Retailers won’t make much money” on Black Friday “if shoppers don’t pick up additional merchandise,” Delk said.

To contact the reporter on this story: Ashley Lutz in New York at alutz8@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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Photographer: Justin Sullivan/Getty Images

Pedestrians walk by an Apple iPod Touch window display in San Francisco.

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Photographer: Justin Sullivan/Getty Images

Pedestrians walk by an Apple iPod Touch window display in San Francisco. Close

Pedestrians walk by an Apple iPod Touch window display in San Francisco.

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Shoppers look for bargains at Toys"R"Us on Thanksgiving Day, November 25, 2010, in New York City. Close

Shoppers look for bargains at Toys"R"Us on Thanksgiving Day, November 25, 2010, in New York City.

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Shoppers Jeri Hull, left, and Karen Brashear, right, wait in line while shopping at Toys'R'Us during the Black Friday sales event in Fort Worth. Close

Shoppers Jeri Hull, left, and Karen Brashear, right, wait in line while shopping at Toys'R'Us during the Black Friday... Read More

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Black Friday advertising on the Wal-Mart Stores Inc. and Best Buy Co. websites. Retailers are pouring on the discounts to attract consumers grappling with 9 percent unemployment and a slower U.S. economic expansion than previously estimated. Close

Black Friday advertising on the Wal-Mart Stores Inc. and Best Buy Co. websites. Retailers are pouring on the... Read More

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