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Retailers’ Thanksgiving Deals Cut Black Friday Sales

By Sapna Maheshwari and Matt Townsend
November 25, 2012 1:41 PM EST 10 Comments
Shoppers wait to enter the Westfield San Francisco Centre mall in San Francisco on Friday.
Photographer: David Paul Morris/Bloomberg
Shoppers wait to enter the Westfield San Francisco Centre mall in San Francisco on Friday.

Thanksgiving Day openings and midnight deals at retailers from Target Corp. (TGT) to Wal-Mart Stores Inc. (WMT) drew U.S. shoppers out earlier than ever, trimming spending on Black Friday at stores. Online shopping surged.

Sales on the day after the Thanksgiving holiday in the U.S. fell 1.8 percent from last year to $11.2 billion, according to a report yesterday from ShopperTrak, a Chicago-based researcher. That compares with a 6.6 percent gain a year earlier. Online shopping on Black Friday rose 26 percent to exceed $1 billion for the first time, research company ComScore Inc. said today.

Retailers have turned Black Friday, once a one-day event after Thanksgiving, into a week’s worth of deals and discounts. With the earlier openings, online deals starting as far back as last weekend and new promotions stores are offering to win return visits, shopping malls were less hectic on Black Friday this year, said Ramesh Swamy, an analyst at Deloitte LLP.

“Retailers are going to pace themselves and start rolling out different types of promotions to keep consumers interested,” Swamy said yesterday in a telephone interview from Pasadena, California. Shoppers visiting stores this weekend are getting coupons that can be used starting this week or after Dec. 1 to lure them back, he said.

Black Friday foot traffic this year rose 3.5 percent to 307.7 million store visits, ShopperTrak said.

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 21 percent on Black Friday and 17 percent on Thanksgiving, according to IBM Benchmark.

Rising Sales

“This was a decent two days, and so that’s a good base and foundation for the rest of the holiday season,” Bill Martin, founder and executive vice president of ShopperTrak, said in a telephone interview yesterday. “It will just take time see to see if consumers spent all their money or if they’ll take another bite of the apple as the season matures.”

Retailers’ Thanksgiving Day deals probably attracted some of the spending that usually would have taken place on Black Friday, Martin said in the statement.

The National Retail Federation says holiday sales, including online, will rise 4.1 percent to about $586.1 billion this year, compared with a 5.6 percent gain in 2011. Online sales expected to gain 12 percent to $96 billion this year, three times as fast as total sales.

Online Shopping

One reason may be that retailers have been putting many of their deals on the Web first. Target offered the same discounts it normally would reserve for stores on its website on Nov. 21. Staples Inc. (SPLS) posted what it called pre-Black Friday deals online on Nov. 18.

Online sales rose 16 percent in the first 23 days of November to $13.7 billion, ComScore reported today. Sales on Thanksgiving Day itself increased 32 percent to $633 million.

Mobile shopping also continued to gain popularity. EBay Inc. (EBAY)’s PayPal said the number of customers shopping through their tablets or smartphones more than doubled on Thanksgiving from last year, while mobile payment volume nearly tripled on Black Friday. IBM said 24 percent of consumers used a mobile device to visit a retailer’s site, up from 9.8 percent last year.

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

Mobile Results

“This is the year that mobile finally went mainstream,” Anuj Nayar, a PayPal spokesman, said in a telephone interview on Nov. 23. Many people finished Thanksgiving meals and then shopped on their tablets or phones, he said.

Forever 21 Inc., the closely held fast-fashion retailer, earlier this month introduced a revamped version of its mobile application that includes a barcode-scanning feature.

Shoppers can scan merchandise in stores to add items to an online wish-list, select different colors and sizes or show friends what they’re browsing, as the company looks to “blur the boundaries between in-store and online shopping,” Linda Chang, global marketing director, said in an e-mail.

Retailers also continued the trend of ever-earlier openings. Wal-Mart and Toys “R” Us Inc. opened at 8 p.m. on Thanksgiving, while Target pushed its openings to 9 p.m. to draw more families.

Earlier Starts

“Based on the popularity off the traffic, we’re going to see more Thursday promotions next year than we did this year,” ShopperTrak’s Martin said.

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

Extended Hours

Fast Retailing Co.’s Uniqlo stores opened Black 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.

Miranda Miller, 34, visited Target on Thursday night and left because the line “was just way too long,” she said in an interview yesterday at Westfarms Mall in Farmington, Connecticut. The homemaker and mother of four boys from Mechanicsburg, Pennsylvania, went to Kohl’s Corp. (KSS) and Target stores on Black Friday with five $10-off coupons and said she didn’t have to wait in lines to check out.

Retailers 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.

Unemployment Rate

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 boost spending, the highest level since 15 percent in 2007, while 38 percent said they would spend less.

Karen Carlow, a 57-year-old from Coventry, Rhode Island, said the damage caused by superstorm Sandy made her “think more about what other people lost.” Carlow said in an interview at the Crystal Mall in Waterford, Connecticut, that she was less willing to make extravagant purchases this year.

Others are spending carefully as the unemployment rate, while down from almost 9 percent a year ago, remains above 7 percent. Deb Bettini, 56, plans to spend about $300 on holiday gifts, about the same as last year and mostly in the form of gift cards to retailers such as Lowe’s Cos. and Panera Bread Co., she said said yesterday after spending $27.04 on pajamas and socks at a Roses discount store in Reidsville, North Carolina.

‘Super Saturday’

“There is a lot of belt-tightening by companies going on and people are still losing their jobs,” said Bettini, who with her husband, Randy, raises grapes, mushrooms and vegetables on a family farm. They also plan to give gift baskets with homemade cider. “People are trying to get by the best way they can.”

Holiday sales may 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.

“Because of the extra weekend versus last year, we’re going to have a true Super Saturday,” said Deloitte’s Swamy, referring to the Saturday before Christmas which vies with Black Friday as the busiest shopping day of the year.

Weather may help gains too as colder temperatures increase sales of sweaters, boots, scarves, gloves and jackets, according to weather-data provider Planalytics Inc. Last year’s Black Friday was the warmest in five years, the Berwyn, Pennsylvania- based firm said in an e-mail.

Fashion Trends

New fashion trends may also aid purchases. Teens are dressing up more this year, with guys donning sports jackets, button-downs, and skinny ties with jeans, and girls buying tops and bottoms “that sparkle and shine,” for daytime-to-evening looks, Michael Leedy, chief merchandising officer at American Eagle Outfitters Inc., said in an e-mail.

The company is offering 40 percent off all items in store and online from Nov. 21 through Nov. 25, he said, as well as free shipping from the Web.

Gap Inc. (GPS), the biggest U.S. specialty-apparel retailer, saw busy stores on Black 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 Inc.’s North America division for its namesake brand, said in a telephone interview on Nov. 23. “There’s a lot of energy in the malls right now, which is great.”

To contact the reporters on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net; Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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