Black Friday Comes Early as U.S. Retailers Panic Over Holiday Sales
Ah, the smells of late November. Wood fires. Decaying leaves. The unforgivable java sin of a Pumpkin Spice Latte at Starbucks. And the stench of desperation from retailers, fearful that the vital Christmas holiday season will be a stinker.
Historically, the several weeks between the onset of daylight saving time and the end of the year were a great time for retailers of all stripes. Lured by big discounts and fueled by cheap credit, shoppers hit the malls with abandon and stuffed their SUVs with bags of Hanukkah and Christmas merchandise. Year after year, in an age of long business cycles and rare recessions, holiday sales reliably rose.
But things have changed. In 2008, for the first time in recent memory, holiday sales fell 4.5 percent from the year before. In 2009, with the recession lingering, sales barely budged. For the past few years, sales have risen solidly, but not impressively. In 2012, holiday sales rose just 2.7 percent. At the same time, brick-and-mortar retailers have been steadily losing market share to online retailers and e-commerce generally. Over the past year, total retail sales have risen 3.9 percent, but non-store retailers saw their business grow nearly 10 percent. It all means the holiday shopping season has become a period full of extreme pressure for retailers. Not only could the season make the difference between a profit and loss for the year, for many retailers it could make the difference between life and death.
That’s why big retailers keep pushing up the beginning of the season. First came the news earlier this month that retailers would start Black Friday on Thursday. After all, in between eating turkey and watching football, millions of Americans are undoubtedly shopping online on their PCs and tablets. Unwilling to cede the day completely to the online folks, Target said it plans to open at 8 p.m. on the night of Thursday, November 28, and stay open until 11 p.m. Friday, November 29. That happened in 2012. But this year, stores are opening up their doors earlier than they did last year. Walmart, which opened for business at 8 p.m. last Thanksgiving, will open at 6 p.m this year.
Not to be outdone, Kmart said it would open its doors at 6 a.m. on the morning of Thanksgiving and stay open for 41 straight hours until 11 p.m. the next day. Kmart’s corporate sister, Sears, is going a little less hard core. It won’t open until 8 p.m. on Thanksgiving. And of course, the opening of big anchor tenants on Thanksgiving encourages smaller adjacent retailers and landlords to do the same. Those who remain closed risk losing sales and the spillover traffic. So, for example, Simon Property Group, the giant mall company, this year for the first time said it would open some of its malls on Thanksgiving, giving tenants the opportunity to ring up some sales on what had been a dark day. (Employees are less than pleased.)
In today’s climate, it’s difficult for companies to resist. With everybody who is anybody in retailing opening on Thanksgiving, Walmart is seeking to get even more of a leg up on its competition. “Holiday shoppers don’t have to wait until Black Friday to start shopping for deals at Walmart,” the company announced on Tuesday. “At 8 a.m. on Friday, Nov. 22, Walmart will kick off a pre-Black Friday savings event in stores and online, lowering the prices on popular toys and electronics, to match select Black Friday offers from Target, Toys R’ Us and Best Buy one week early.” Forget about shopping on Thanksgiving, the nation’s biggest retailer is telling its customers. Real bargain shoppers go out and get their big savings the week before Thanksgiving.
Once the early shopping cat was let out of the bag, that was bound to happen. If you’re a mass retailer, there’s no point in holding back or showing restraint. Sure, you may pay respect to one of America’s most important holidays and keep your doors closed. But you might miss out on a few basis points of profit margin if you do. And we can see where we are headed. At this rate, by 2017, big retailers will be holding their Black Friday doorbusters on the Friday before Labor Day.
The irony is that this season may be shaping up to be better than expected. The National Retail Federation forecasts that holiday sales will rise 3.5 percent this year, which is better than the 10-year average. Meanwhile, the Census Bureau reported Wednesday that retail sales in October, when consumer confidence was sandbagged by the government shutdown, rose at a healthy clip. The labor market is improving, with the economy adding more than 200,000 jobs in October. Compared with a year ago, 2.329 million more Americans have payroll jobs. We have a serious problem with inequality, and corporate America has been self-destructively stubborn about boosting wages. But this holiday season, significantly more people are working at slightly higher wages than a year ago. The data flow would seem to support a decent—possibly good—holiday shopping season. America’s retailers aren’t taking any chances.