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. are opening earlier and offering more markdowns than ever on the day after Thanksgiving. The result may be higher sales and lower profits for retailers over the holiday season.
For example, Wal-Mart Stores Inc. is promoting a two-piece boys' sleep set featuring Disney characters for $4.47 U.S. J.C. Penney Co. will sell $18.88 U.S. digital music players and $30 U.S. kids' camcorders. Black Friday shoppers who visit a Sears Holdings Corp. store will receive a coupon book with more than $3,000 U.S. in discounts.
Retailers are pouring on the discounts to attract consumers grappling with 9% unemployment and a slower U.S. economic expansion than previously estimated. Third-quarter gross domestic product climbed at a 2% annual rate, down from a prior estimate of 2.5% growth, the Commerce Department reported yesterday in Washington.
Consumer spending, which accounts for about 70% of the economy, grew at a 2.3% annual rate, little changed from the 2.4% initial estimate.
In another sign of industry weakness, October same-store sales at Limited Brands Inc. and Target Corp. 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% this year, or about half of last year's 5.2% gain, according to the National Retail Federation. The Washington-based NRF will release Thanksgiving weekend sales numbers on Nov. 27.
As many as 152 million people will hit the stores on Black Friday, up 10% 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%, the average estimate of 100 executives in BDO's survey conducted last month. That compares with a 3.8% 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," said another expert.
