Black Friday Draws Millions in Early Kickoff for Sales
Target Corp. (TGT) took some flak for opening stores on Thanksgiving because doing so would give employees less celebrating time with their families. Still, the 9 p.m. start attracted more parents and their kids.
“Earlier is more convenient to get out after the Thanksgiving dinners,” said Bryan Everett, senior vice president of Target stores. The increase in families boosted purchases of clothes and home goods too as shoppers spent longer browsing than a year ago, he said.
Target pushed openings forward from midnight last year as millions visited stores for the unofficial start to the holiday shopping season. With consumers facing a sluggish economy and the threat of tax increases that may result if Washington doesn’t avert the so-called fiscal cliff, this weekend will be a barometer of what’s to come for retailers in the next five weeks. One early sign is that online sales rose 20 percent as of 3 p.m. New York time yesterday, according to IBM Benchmark.
To get shoppers to spend more than last year, retailers have continued to turn Black Friday, originally a one-day event after Thanksgiving, into a week’s worth of deals and discounts. A couple of years ago chains started opening at midnight and this year Wal-Mart Stores Inc. (WMT) and Toys “R” Us Inc. pushed it to 8 p.m. on Thanksgiving. Other chains began offering Black Friday deals online as early as last weekend.
Pull Demand Forward
Shrugging off the threat of protests at its stores by groups backed by the United Food & Commercial Workers International Union, Wal-Mart said it had larger crowds than last year and racked up 10 million transactions on Thanksgiving, including 1.3 million televisions and 250,000 bicycles.
How much expanding Black Friday actually boosts sales remains to be seen. Some industry analysts say it shifts sales earlier in the season rather than increasing demand. That was the case at the malls Marshal Cohen, a retail analyst for NPD Group Inc., visited in the New York area. The Thanksgiving evening rush turned Black Friday into what shopping is like on a typical Saturday, he said.
“Just because they extended hours doesn’t mean shoppers have more relatives to buy for and more money to spend,” Cohen said in a phone interview. “More hours doesn’t always mean more business.”
The Standard & Poor’s 500 Retailing Index (S5RETL) gained 1.1 percent at the close in New York yesterday, marking its fifth straight increase. The measure has gained 28 percent this year.
Groups protesting against the world's largest retailer, OUR Walmart and Making Change at Walmart, had vowed to mount 1,000 actions online and at stores this week through Black Friday to publicize what they said are the chain’s manipulation of hours and benefits, efforts to keep people from working full time and discrimination against women and minorities. Wal-Mart said in a statement yesterday that 26 protests took place on Thanksgiving and fewer than 50 employees participated.
At Walt Disney Co. (DIS)’s stores, visits and average transaction gained at a single-digit percentage rate at the 150 stores that opened at midnight on Thanksgiving, according to Paul Gainer, executive vice president for Disney stores.
“Consumers spending a little more than last year in the stores is a really good indicator of signs of things to come through the holiday season,” Gainer said in a telephone interview.
$2,000 Shopping Spree
Retailers also had increasingly confident consumers visiting stores this weekend. More Americans this month said the U.S. economy will improve than any time in the past decade, according to the Bloomberg Consumer Comfort Index. The share of households saying it would get better rose to 37 percent, the highest since March 2002. A year ago, the measure showed a record number of consumers said it was a bad time to spend.
Ernesto Aracena had already spent $2,000 by 11 a.m. yesterday in Manhattan at chains such as Abercrombie & Fitch Co. and Urban Outfitters Inc. (URBN) The 20-year-old, who started shopping at midnight on Thanksgiving, has a lot more money this year after starting a personal trainer business.
“I’ve been waiting for Black Friday to come through to buy a bunch of clothes,” he said while holding three shopping bags. “I went home about three times already. I left in the morning, got clothes, went home, dropped my bags off, came back, bought more clothes, went home, came back.”
A rebound in housing and the job market, along with a drop in household debt, has led additional consumers to say they’ll buy more this holiday, according to a survey this month by the Credit Union National Association and the Consumer Federation of America. Of those polled, 12 percent said they would ramp up spending, the highest level since 15 percent in 2007.
Still, the survey reported 38 percent said they would spend less. Carlos Serrano fell into that group after his printing business was hurt by Hurricane Sandy. The 42-year-old resident of East Stroudsburg, Pennsylvania, planned to cut his holiday spending in half to $1,000 this year. He came to Georgetown in Washington yesterday, hoping to find deals that would help him stretch his dollars.
“I am buying the one big item and that’s it,” Serrano said.
The National Retail Federation says holiday sales, including the Web, will rise 4.1 percent to an estimated $586.1 billion this year, compared with a 5.6 percent gain in 2011. Even though thousands of stores are opening earlier, 147 million consumers, or 5 million fewer than last year, plan to hit the malls this weekend, according to an NRF survey conducted by BIGresearch.
A drop in shoppers didn’t seem to be the case at the J.C. Penney Co. (JCP) location in Waterford, Connecticut. The store sold out coffee makers and toasters that were reduced to $8 from as much as $30 about four hours after it opened at 6 a.m. on Black Friday.
“The traffic is beyond expectation, it’s crazy,” said store manager Krisztina Kerti. “If it’s going to be like this, we’re going to be extremely happy.”
Holiday sales may also get a boost from there being 32 days between Thanksgiving and Christmas this year compared with 30 in 2011, Jennifer Davis, an analyst at Lazard Capital Markets in New York, wrote in a note.
Weather may help gains too as colder temperatures increase sales of sweaters, boots, scarves, gloves and jackets, according to weather-data provider Planalytics Inc. Last year’s Black Friday was the warmest in five years, the Berwyn, Pennsylvania- based firm said in an e-mail.
Another trend this year: putting the same so-called doorbuster deals -- the limited-supply discounts used to draw shoppers to stores -- on the Web first. Target, which opened on Thanksgiving for the first time, also offered the same deals it normally would reserve for stores on its Website on Nov. 21. Staples Inc. (SPLS) posted what it called pre-Black Friday deals online on Nov. 18.
That strategy could backfire because doorbusters are meant to lure people into a store with deals that in many cases are money losers, and get them to make other purchases, according to Paul Swinand, a retail analyst for Morningstar Inc. (MORN) in Chicago. That dynamic isn’t as prevalent on the Web, he said.
“The only reasons loss leaders work is if there is some kind of momentum in the buying patterns,” Swinand said. “To me, there is less momentum in online loss leaders.”
Still, the Web is becoming increasingly important during the holidays with online sales expected to gain 12 percent to $96 billion, three times as fast as total sales, according to the NRF.
While shoppers flocked to stores after their Thanksgiving meals, not everyone is a fan of the extended hours. Workers and their supporters have signed online petitions saying they are unfair because they lose time with their families. That includes one on Change.org from a Target worker calling for the discounter to revert to a 5 a.m. Black Friday opening that has garnered more than 350,000 signatures this year, according to the organization.
Labor strife didn’t deter Amber Hall, 29, from filling two carts full of dolls, toys and a Sony Corp. (6758) stereo at a Wal-Mart on Thanksgiving night in Reidsville, North Carolina
“I was telling my momma that it’s a shame stores are opening earlier and earlier on Thanksgiving,” she said at the checkout line where 10 carts were backed up behind her. “But the stores got to do what they got to do.”
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