NEW YORK, Nov 30 — The annual holiday shopping season is under way in the US, with retailers working to keep consumers flocking to stores after a flurry of spending on Thanksgiving and Black Friday.
Retailers’ efforts to spread out their promotions, instead of concentrating them all on Black Friday, worked on Merly Hernandez, who waited until today to start shopping at the Paddock Mall in Ocala, Florida. She knew good deals would still be available and wanted to avoid the crowds.
“I took the time to look around before,” said Hernandez, who was visiting from Puerto Rico and had nabbed items at 50 per cent off. “I know right where to visit.”
Retailers will have to draw shoppers like Hernandez and sustain brisk sales throughout the season in order to maintain their profit margins, said Charlie O’Shea, an analyst at Moody’s Investors Service in New York. Chains that can’t maintain momentum may have to offer massive discounts before Christmas and cut prices even more after the holiday, he said.
“The retailers that have the best holidays are the ones that manage” balancing promotions and profitability, O’Shea said in a telephone interview. “Minimising the discounting, that’s the tough part.”
Holiday forecast
The National Retail Federation forecast that about 140 million shoppers would hit the stores or shop online from Thanksgiving through tomorrow. So-called Cyber Monday arrives on December 1, when websites offer even more promotions. The rush kicks off a holiday season that the NRF projects to be the best in three years, with sales growing 4.1 per cent, helped by falling unemployment, rising wages and lower gas prices.
Holiday shopping is key for retailers, with sales in November and December accounting for about 19 per cent of annual revenue, according to the NRF. The term Black Friday is believed to derive from the myth that retailers didn’t become profitable until the day after Thanksgiving each year.
While O’Shea cautioned that it’s hard to draw conclusions from his limited checks of stores in northern New Jersey on Thanksgiving and Black Friday, the season looks to be “off to a pretty good start.” He said he monitored the same locations as last year and saw busier parking lots, longer lines and fuller shopping carts.
Online boost
Although most retailers won’t report holiday results until January, some data on e-commerce sales already is available. Online sales gained 14 per cent on Thanksgiving Day and 9.5 per cent on Black Friday, according to International Business Machines Corp’s digital analytics benchmark.
Comparable sales at Amazon.com Inc, the world’s largest online retailer by revenue, rose about 26 per cent on Thanksgiving and 24 per cent on Black Friday, according to ChannelAdvisor Corp.
Consumers had the opportunity to start their shopping earlier this week as retailers experimented with spreading their deals over a longer period. Express Inc began offering 50 per cent off everything starting November 25 through noon yeterday, and Target Corp rolled out pre-Black Friday deals of up to 60 per cent off on some items.
Still, the main wave of in-store deals started on Thanksgiving as many retailers expanded their hours on the holiday. JC Penney Co opened at 5.00pm, compared with 8.00pm in 2013. Macy’s Inc and Target opened at 6pm, two hours earlier than last year.
Terrance Martin, a 42-year-old truck driver, lined up at a Best Buy Co store in Paramus, New Jersey, at 7.00am on Thanksgiving for its 5.00pm opening to score an almost US$350 (RM1,183) discount on a 50-inch Panasonic television.
‘Worth it’
“It was worth it for that kind of deal,” said Martin, who’s from nearby Fair Lawn. Even though he spent almost 10 hours waiting for the store to open, he didn’t miss the holiday entirely: His sister brought him turkey and yams.
Even with traditional doorbusters like heavily promoted televisions drawing some shoppers, others know they can get steep discounts throughout the holiday season, and are adjusting their shopping accordingly, said Simeon Siegel, a New York-based analyst at Nomura.
“You can’t outsmart the consumer anymore,” he said in a phone interview. “You need to pander to where the consumer wants to shop and when.”
More purchases also are taking place online instead of in brick-and-mortar stores. Shoppers plan to do 44 per cent of their gift buying on the Web, the highest percentage ever, the NRF said last month.
Cyber week
To capture those trends, both Toys “R” Us Inc and Wal- Mart Stores Inc advertised on the front pages of their websites today that something called “cyber week” had begun. Best Buy Co, which yesterday had to shut down its website temporarily after a surge in traffic from customers’ mobile devices hurt performance, said today on its website that many of its Black Friday deals still are available.
Retailers’ sales have been getting a hand from consumer sentiment that’s the highest since before the recession. Consumer spending, which accounts for about 70 per cent of the economy, grew at a 2.2 per cent annualised rate last quarter, exceeding estimates for a 1.8 per cent improvement. The gain was spread across durable and non-durable goods.
Lower gasoline prices also are leaving more money in consumers’ wallets. The average cost of a gallon of regular gasoline was US$2.81 earlier this week, the lowest in four years, according to the automobile group AAA.
‘Better mood’
“All the economic data is better than it was this time last year, and gas prices on top of that,” said Brian Yarbrough, an analyst at Edward Jones & Co in St. Louis. “The consumer seems to be in a better mood.”
Pieranyely Figuero, a 25-year-old administrative assistant from New York City, already has done some shopping and may be enticed to open her wallet again. She spent less on Thanksgiving and Black Friday than planned because some of the deals she wanted had sold out. She said she still wants a pair of headphones from Apple Inc’s Beats unit.
“Maybe on Cyber Monday,” Figuero said as she unloaded her shopping cart, which was full of items including an US$18 chair, at a Target store in Brooklyn yesterday. “I just love shopping.” — Bloomberg
