Black Friday's Losing Its Mojo and Retailers Might Be Relieved

Macy's Profit Problems; Wal-Mart's Big Holiday Bet
  • Americans are taking a darker view of post-turkey madness
  • Earlier deals mean more people do holiday shopping sooner

Black Friday’s death has been greatly exaggerated before. This year, not so much.

True, crazed bargain-hunters will never give it up, hooked on middle-of-the-night queues for blenders and fisticuffs over beds-in-a-bag. But the shopping day after Thanksgiving is growing less appealing for all involved. Retailers like Target Corp. and Best Buy Co. are spreading discounts through more of November, skimping on costly race-to-the-bottom tactics geared to getting people in the door as soon after the holiday meal as possible. And surveys are finding consumers are less interested in participating in the industry ritual.

Black Friday shopping
Black Friday shopping
Photographer: Daniel Acker/Bloomberg

“I will never set foot in a store on Black Friday,” said Cindy Feinstein, a shopper making holiday purchases at Macy’s Herald Square in Manhattan this week. “Those sales can be found at other times of the year. There’s no way it’s worth it.”

This could actually be good news for merchants, which can boost profits by cutting back on the rock-bottom discounts Black Friday has come to demand, not to mention the security guards needed to keep order. Target is planning 10 days of specials beginning Nov. 22. Best Buy and Home Depot Inc. are among those offering Black Friday pricing way before Thanksgiving.

“Retailers have shifted gears and said, we’re going to spread this out,” said Keith Jelinek, a senior managing director at FTI Consulting. “You’re going to see a lot more retailers pull back.”

Store Stampedes

The industry is also facing the reality that more and more people are going online. Annett Rodriguez of New York is one of them, a former regular at Wal-Marts where she would wait hours to endure an experience she called “terrible, horrible and crowded -- people were fighting and stampeding in the stores.”

The National Retail Federation is forecasting online sales will rise between 6 and 8 percent in November and December to as much as $105 billion. At the same time, more than half of consumers -- 52 percent -- said they’re relying less on going out on Black Friday to make holiday purchases, according to a Deloitte survey. That’s 5 percentage points higher than last year.

“The fact that we’re seeing such a ramp up in online purchasing, the fact that
you don’t have to be the first person in line when a store opens -- how
profitable is it really?” said Jonathan Eyl, lead consumer analyst at Nasdaq Advisory Services. People who venture out on Friday are more deal-driven than retailer-loyal, he said, and stores have to wonder about focusing on generating traffic on one day “if those customers aren’t going to come back.”

‘Extremely Important’

None of this is to say that Black Friday will ever be buried, or that retailers want it to be. “Black Friday is different, but it’s not dead,” said Kathy Grannis Allen, a spokeswoman for the National Retail Federation. “It’s always going to be important.”

Even though sales over the holiday weekend fell 11 percent last year after people did more shopping earlier in the month, the NRF said overall holiday spending was up 4.1 percent. And the federation estimates the weekend still accounts for 10 to 15 percent of the total. Allen said there will continue to be a focus on the Friday, which is “about getting people into the stores and getting them to come back throughout the season.”

QuickTake Black Friday

J.C. Penney Co. is opening at 3 p.m. on Thanksgiving, two hours earlier than last year. Wal-Mart Stores Inc. will start offering steep discounts starting on its website early Thanksgiving morning and in stores starting at 6 p.m. And for Macy’s Inc., the Thanksgiving Day parade host that just missed third-quarter sales estimates and cut its annual profit forecast, Black Friday is still the mother of all sales days. 

“It’s extremely important to us,” Chief Executive Officer Terry Lundgren said. “Customers will come out -- they always do.”

During the recession, retailers ramped up promotions and stretched their Black Friday weekend hours. Then they began the encroachment on Thanksgiving itself. This year some, including Staples Inc. and Hennes & Mauritz AB, are reversing course and won’t be open on Thursday. Recreational Equipment Inc., the outdoor-gear retailer, will be closed on Black Friday as well. (In the U.K., Wal-Mart’s Asda supermarket and some other chains are scrapping Black Friday promotions two years after introducing them -- in a country that doesn’t celebrate Thanksgiving -- in part because of crashing websites and fights between customers.)

Increasingly, Black Friday “really doesn’t make a ton of sense for the retailers,” said Bryan Gildenberg, chief knowledge officer at the consulting firm Kantar Retail LLC. “They’re selling too much stuff at too low a price.”

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