Black Friday Myths & Madness
Today is Black Friday. The day after Thanksgiving in the United States officially begins the retail holiday season. Kathy and I are caring for grandson, Jaymeson, while his parents grapple for savings at 4 AM. According to the New York Times, they will be joined by 134 million shoppers. Black Friday shopping sometimes feels like a hockey game with a few elbows and fists flying over specials. One Wal-Mart employee died and three customers were injured during a 2008 stampede. We worry about Jaymo’s parent’s health and credit cards until they return.
Kathy and I are not the only ones anxious about today. Manufacturers and retailers approach the Thanksgiving Weekend with both hope and concerns. The hope: this weekend ignites consumer sales for the rest of the season, eventually accelerating the return of a strong economy. The concern: with high unemployment and tight credit, post-Black Friday retail sales are weak. In 2008 the Thanksgiving Weekend was 1.1% less than 2007 sales, but according to Spending Plus, the overall holiday sales fell 6.3% versus the previous year. Reuters reported specialty retail giants like the Gap and Ambecrombie & Fitch dropped 19% while Best Buy fell 26% versus the previous year. What will 2009 bring?
There are some myths about Black Friday. It is not the biggest shopping day of the year, ranking fifth or sixth over the last five years. The last Saturday before Christmas is the number one American shopping day. (And I thought I was the only procrastinator snarfing up last-minute deals.) Another myth is Black Friday’s role as a barometer for the holiday season sales. There are too many variables for a retailer to use this weekend’s sales a foundation for the entire holiday forecast. Black Friday is becoming an event where customers are now trained to reach for amazing discounts on the first day. The New York Times reports Best Buy is distributing tickets for products on a first-come, first-served basis to ensure an orderly shopping experience — included $197 H.P. laptop and a Samsung 46-inch LCD HDTV for $999. Retailers need to closely watch their shoppers. Are they only shopping for the day’s special discounts? Are they doing all of their holiday shopping on Thanksgiving weekend?
What is likely to happen in the 2009 U.S. retail holiday season? Pretend you are a retailer that ended 2008 with enough inventories to at least take you to Valentine’s Day. Assume you need to begin purchasing 2009 holiday inventory in July. According to the U.S. Census Bureau, the average retail inventory will grow by 23% between August and November. It is likely with high unemployment and tight credit; retailers were cautious in their 09 inventory build. So beware my fellow procrastinators! Wait until the Saturday before Christmas for an in-store or web deal and we may find empty shelves and long delivery dates. While most experts believe the 2009 holiday shopping center will be slightly better than last year, we are not talking about a big hurdle. Scratching back to 2007 levels would be a huge retail victory. Should 2009 end with decent sales and low inventories, the holiday season may help accelerate the economy with increased manufacturing and more positive pundits talking about growth.
Of course if I were an expert on this, my little Jaymeson will be driving his Jag to Harvard.
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