Thanksgiving Deals Cut Black Friday Morning Traffic

Saturday, 24 Nov 2012 11:57 AM

 

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Thanksgiving Day openings and midnight deals at retailers from Target to Wal-Mart drew U.S. shoppers out earlier than ever, thinning crowds on Black Friday morning.

Mall traffic was heaviest from midnight to 2 a.m. and weakened later in the morning, said Adrienne Tennant, an analyst at Janney Montgomery Scott in Washington. Still, sales for the rest of the weekend will top last year, she said.

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 and Toys “R” Us pushed it to 8 p.m. on Thanksgiving. Other chains began offering Black Friday deals online as early as last weekend.

“This year was among the weakest early-morning Black Friday traffic reads in several years, but we believe this is 100 percent due to the Thanksgiving evening and midnight store openings this year and aggressive midnight promotions,” Tennant wrote on Saturday. Deals that lasted for whole days or the entire weekend also reduced the urgency of Black Friday “early- bird” purchases, she wrote.

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 serve as 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.

Mobile shopping also continued to gain popularity. EBay’s PayPal said the number of customers shopping through their tablets or smartphones more than doubled on Thanksgiving from last year.

Wal-Mart, which offered two-day online-only Black Friday specials, said online traffic from its mobile apps tripled, and that mobile accounted for 45 percent of all Walmart.com traffic on Thanksgiving.

“This is the year that mobile finally went mainstream,” Anuj Nayar, a PayPal spokesman, said in a telephone interview. Many people finished Thanksgiving meals and then shopped on their tablets or phones, he said.

Target pushed its openings to 9 p.m. from midnight, seeking to draw more families.

“Earlier is more convenient to get out after the Thanksgiving dinners,” said Bryan Everett, senior vice president of Target stores. The higher number of families boosted purchases of clothes and home goods too as shoppers spent longer browsing than a year ago, he said.

Not everyone was a fan of the earlier starts. While Kellie Prater, 39, got in line at Target in Trotwood, Ohio, at 6:30 p.m. on Thanksgiving to get a dollhouse and other toys when it opened at 9 p.m., she said she wished the store didn’t open until Friday morning.

“These people should not open until 5 a.m. or 6 a.m.,” said Prater, a stay-at-home mother of three. “Let people be with their family — they’re minimum wage.”

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, 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.”

Fast Retailing’s Uniqlo stores opened Friday at 8 a.m., compared with 6 a.m. last year, because “there’s not so many customers in the morning” and it helped employees, said Shin Odake, chief executive officer of its U.S. unit. Online consumers appeared to be waiting for Cyber Monday to make purchases, he said.

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.

The protesting groups, 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 retailer’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 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.

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 and Urban Outfitters. 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, Pa., planned to cut his holiday spending in half to $1,000 this year. He came to Georgetown in Washington on Friday, 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.

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. Last year’s Black Friday was the warmest in five years, the Berwyn, Pa.-based firm said in an e-mail.

Gap. the biggest U.S. specialty-apparel retailer, saw busy stores Friday as customers responded to offers of $19 sweaters and $5 kids and baby graphic Ts from midnight to noon.

“We’re encouraged by what we’re seeing out there,” Mark Breitbard, president of Gap’s North America division for its namesake brand, said in a telephone interview yesterday. “There’s a lot of energy in the malls right now, which is great.”

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 offered the same deals it normally would reserve for stores on its Website on Nov. 21. Staples Inc. posted what it called pre-Black Friday deals online on Nov. 18.

Total online sales expected to gain 12 percent to $96 billion this year, three times as fast as total sales, according to the NRF.

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 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.”

© Copyright 2014 Bloomberg News. All rights reserved.

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