The traffic stretched for miles at around midnight on Thanksgiving near the last exit on New York's Long Island Expressway. There was no accident or late-night construction, just thousands of cars heading for the same destination: the Tanger Outlets (SKT) mall in Riverhead, N.Y., for its "Merry Midnight Madness" sale.
Swarms like these were common around the country on "Black Friday," the traditional day-after-Thanksgiving start to the holiday shopping season. Crowds lined up in the wee hours to grab the obligatory early-bird deals many retailers offered to ensure a strong start to this make-or-break period. Many of the big chains from Target (TGT) and Toys 'R' Us to Circuit City (CC), J.C. Penney (JCP), and Macy's (M) opened their doors as early as 4 a.m.
But while the initial results have been robust, retailers are leery that the long lines may be less a reflection of consumer confidence than mounting anxiety about saving money in a jittery economic climate.
No Champagne Corks Yet
Still, it was a very good start: Retailers attracted 147 million shoppers over the three-day holiday weekend, up 4.8% from last year, according to a survey conducted by the National Retail Federation. Black Friday's results were especially impressive. About 14.3% of all Americans were out shopping before 4 a.m. on Black Friday, up from 12.4% in 2006, the federation estimates. And ShopperTrak RCT, which tracks the activity at more than 50 million retail outlets, estimates that Black Friday sales rose 8.3% from last year's level. "The Black Friday outpouring should have [retailers] breathing a sigh of relief," says Bill Martin, co-founder of ShopperTrak.
But retailers won't start popping the champagne yet, as a closer look at early spending patterns reveals a nervous side to all those pre-dawn shopping excursions. Shoppers spent an average of $347.44, down 3.5% from last year, a sign that the economic uncertainty from higher gas prices and the housing slump has dampened their spirits (BusinessWeek.com, 11/14/07).
Notably, more shoppers visited discounters in this year's early going, reversing the dip in that retail segment seen in 2006. About 55% of shoppers visited discount stores, up from just less than 50% in 2006. That should be good news for Wal-Mart (WMT), the world's largest retailer, which began offering deep holiday discounts as early as Halloween (BusinessWeek.com, 11/13/07). Wal-Mart opened its doors Nov. 23 at 5 a.m., offering hundreds of deals on toys and electronic goods. These included a Sony (SNE) Cyber-shot digital camera for $79.87, and a Garmin (GRMN) GPS navigation device for $128.88, a savings of $50 on each item.
Gearing Up for Cyber Monday
Likewise, shoppers seem to be shying away from bigger-ticket purchases. "While last year showed a greater emphasis on high-definition televisions, this year consumers were focused on lower-priced doorbusters like digital photo frames, laptops, and cashmere sweaters," says Mullin of the National Retail Federation.
While many Americans chose to shop the old-fashioned way, a growing number headed to their computers instead of the malls. Shopping.com, a comparison-shopping Web site, found that traffic directed to merchants from its pages increased 61% compared with last year's Black Friday. That may augur well for online shopping activity on the Monday after Thanksgiving, now known in retail parlance as "Cyber Monday."
In 2006, Shopping.com's traffic on Cyber Monday outpaced Black Friday's activity by 19%. "Online shopping provides value and convenience, which increasingly budget-conscious consumers are craving," says Jim Griffith, dean of education for the online auction and shopping site eBay (EBAY). Rising gas prices also may be driving the desire to shop from home.
Still, online retailers aren't taking chances. A growing number plan to unveil their own blitz of deals to lure shoppers on Cyber Monday. According to the Shop.org/Shopzilla eHoliday Survey, about 72% of online retailers are planning a special promotion, up from roughly 43% in 2005.