Silver as an investment

Retailers Panic: 63% Of Americans Plan Not To Shop On Black Friday

The day after Thanksgiving, also known as Black Friday, is when the holiday shopping season in the United States traditionally begins and is the day when retailers (at least in the past) finally turned a profit, going from “being in the red” to “in the black.” However, in recent years, this trend has seen turned upside down, with sales on Black Friday slipping, as retailers offer pre-Thanksgiving deals ever earlier than in recent years to capture heavily discounted market share (think OPEC) and draw shoppers as “Black Friday” no longer marks the spending peak at brick-and-mortar chains.

According to National Retail Federation data, the number of Thanksgiving weekend shoppers has fallen by nearly a third in just the past three years to 102 million in 2015, from 147 million in 2012, not only as a result of bricks and mortar stores starting the selling season earlier but due to stiff competition form online vendors, most notably Amazon. Moreover, early holiday promotions and online shopping hurt in-store spending by more than 6 percent last year.

As a result, participation in this year’s Black Friday looks like it may be the worst in history: according to a Reuters/Ipsos poll of 1,639 adults showed 63%, or nearly two-thirds, did not plan to shop on Black Friday this year. Some 32% said they plan to finish about half of their holiday shopping on that day. While selling tactics are certainly a factor, one wonders how much of decline in spending is due to lack of disposable income for the tapped out US consumer?

The holiday season is expanding, and Black Friday is no longer the kickoff for the season,” said Natalie Kotlyar, who heads retail and consumer products at business advisory firm BDO Consumer, adding many start holiday shopping at Halloween, Labor Day or even Amazon’s Prime Day on July 12.

Still, retailers are not only not giving up but, as Reuters reports, are on the verge of panic, and have not only redoubled efforts this year to boost sales with familiar tactics but greater intensity, all of which assure even lower margins, but are rolling out the heavy artillery to draw in those consumers who will go out on Friday.

Wal-Mart has already said it will increase inventory by more than half this year and make deals typically reserved for Black Friday available online early Thanksgiving morning. Retail pricing and data analytics firm Market Track said an analysis of 15 top U.S. brick-and-mortar retailers and their Black Friday circular announcements online showed they were about three days earlier than last year.

In what is shaping up to be a giant race to the bottom which may result in an unprecedented, below cost inventory liquidation, retailers have just one response: “they are all trying to beat each other to the punch and starting their promotions earlier and earlier every year,” said Traci Gregorski, senior vice president, marketing at Market Track.

Ironically, the reason why so few Americans will shop this year is becase last year, discounts on popular products deepened by 30 to 40% from Black Friday prices as Christmas got closer, according to Market Track data.

So why rush when consumers now know that “must have” holiday item will only get cheaper?

Mark Cohen, a professor at Columbia Business School and the former chief executive of Sears Canada said the urgency related to Black Friday has greatly diminished. “Consumers know great deals and discounts are available throughout the year, and prices during the holiday season will only get better if they wait,” he said.

Sure enough, deals have been available for several days already on websites of retailers like Target, Macy’s, Kohl’s, Home Depot and Lowe’s Cos. joined with a first of its kind month-long Black Friday promotion.

Some brands are getting in on the action by offering steep discounts that reduce the appeal of waiting for Black Friday. Handbag maker Kate Spade is already offering 75 percent off some items, and off-price chain Saks Off Fifth has similar discounts on some clothing and shoes

* * *

With shopping dynamics changing by the year, and escalating discounting prevalent, retailers are in a state of chaotic flux: the year-end shopping season spanning November and December is crucial
for retailers because it can account for up to 40 percent of their
annual sales. The NRF, which has been overly optimistic at times in the
past with its sales projections, expects holiday sales to grow 3.6
percent this year to $655.8 billion. The NRF will be disappointed yet again – about 70% of retailers expect sales to remain flat this year, according to telephone interviews with chief marketing officers at 100 U.S. retail firms, BDO Consumer said.

Still, despite the changing attitudes toward Black Fruday, there will be few strategic changes from recent years: big bricks-and-mortar players like Target and Wal-Mart will still open at 6 p.m. on Thanksgiving.