Black Fri­day mer­chants ex­pect Amer­i­cans to ex­hale af­ter elec­tion

China Daily (USA) - - Q&A WITH CEO - By BLOOMBERG

Now that Elec­tion Tues­day is over, re­tail­ers are count­ing on the Amer­i­cans turn­ing their at­ten­tion to Black Fri­day.

The National Re­tail Fed­er­a­tion projects that about 137.4 mil­lion con­sumers will make pur­chases in stores or on­line over the four-day week­end that starts on Thanks­giv­ing, mark­ing the kick­off to the hol­i­day shop­ping sea­son. The amount Amer­i­cans have spent has de­clined in the last three years, slip­ping 26 per­cent from 2013 to an av­er­age of $299.60 per per­son last year, ac­cord­ing to the trade group.

By most ac­counts, this hol­i­day sea­son is ex­pected to be a boon for re­tail­ers. Un­em­ploy­ment, gaso­line prices and in­fla­tion are low, while wages, home val­ues and the stock mar­ket con­tinue to rise. Shop­pers have the where­withal to spend, and now re­tail­ers are hop­ing the hol­i­day sea­son will give them a rea­son to. Com­pa­nies such as Kohl’s Corp, Gap Inc and Barnes & Noble Inc have said the US pres­i­den­tial elec­tion was a ma­jor cause of con­sumers’ re­cent re­luc­tance to open their wal­lets. With the out­come set­tled, they’re ex­pect­ing the dol­lars to fi­nally flow.

“We’ve had some, we be­lieve, pent up de­mand — just based on the economics of our con­sumer,” J.C. Pen­ney Co. Chief Ex­ec­u­tive Of­fi­cer Marvin El­li­son said in an in­ter­view this month. “We’re an­tic­i­pat­ing we’ll see pent-up de­mand re­leased, and it be­ing post­elec­tion will only help that.”

US re­tail spend­ing is ex­pected to rise 3.6 per­cent to $655.8 bil­lion in Novem­ber and De­cem­ber, the Wash­ing­ton­based NRF es­ti­mates. Re­tail­ers are poised to take full ad­van­tage of the Thanks­giv­ing hol­i­day pe­riod, now known by some as Black Week, which ac­counts for about 15 per­cent of hol­i­day spend­ing, ac­cord­ing to the trade group.

J.C. Pen­ney opens its doors at 3 pm on Thurs­day to reach shop­pers be­fore they tuck into their Thanks­giv­ing feasts. eBay Inc is try­ing to push the selling even ear­lier: It re­branded the day be­fore Thanks­giv­ing as Mo­bile Wed­nes­day, us­ing dis­counts to tar­get trav­el­ing Amer­i­cans. The sales will stretch through the week­end, with on­line and bricks-and-mor­tar com­pa­nies of­fer­ing deals for Cy­ber Monday.

In­vestors are con­fi­dent that the re­tail in­dus­try will see strong sales. The Stan­dard & Poor’s 500 Re­tail In­dex has risen 4.9 per­cent so far in Novem­ber and is on pace for its best monthly re­turn since July. Re­tail stocks have out­paced the broader mar­ket since the US pres­i­den­tial elec­tion, with the in­dex up 4.7 per- cent since Nov 8, com­pared with the broader S&P 500’s 3 per­cent rally. His­tor­i­cal stud­ies in­di­cate that elec­tions af­fect the tim­ing of re­tail sales rather than the over­all vol­ume, said Jerry Storch, CEO of Saks Fifth Av­enue owner Hud­son’s Bay Co.

“Hope­fully, when we get to Black Fri­day, which re­ally tolls the bell of hol­i­day shop­ping, the con­sumer will start looking for­ward to Christ­mas,” Storch said.

On­line battle

For shop­pers who are ready to spend, they have more ways than ever to do so, with re­tail­ers in­clud­ing Wal-Mart Stores Inc and Ama­zon.com Inc of­fer­ing exclusive deals to cus­tomers who down­load their mo­bile ap­pli­ca­tions. Non­store sales may in­crease 7 per­cent to 10 per­cent this year, reach­ing as much as $117 bil­lion, ac­cord­ing to the NRF. On­line sales ac­count for the bulk of this mea­sure, the group said.

“If Ama­zon had ev­ery­thing, like ev­ery­thing you need in the world, I would buy ev­ery­thing from there,” said Os­car Vi­ral, a 58-year-old chef in New York. “I wanted some­thing from Macy’s, and I got on the in­ter­net be­cause they didn’t have it avail­able in the store.”

With shop­pers able to go on­line any time for deals, some malls are buck­ing the trend of open­ing ear­lier on the Thanks­giv­ing hol­i­day and stay­ing closed that day. The coun­try’s largest shop­ping mall, the Mall of Amer­ica in Min­neapo­lis, will re­main closed, re­open­ing at 5 am on Fri­day. But the 520 stores inside have the op­tion to open on Thurs­day. CBL & As­so­ci­ates, a de­vel­oper, said it would keep 72 of its malls closed that day, as well.

Still, the largest mall op­er­a­tors, Simon Prop­erty Group Inc. and Gen­eral Growth Prop­er­ties Inc haven’t made plans to close on Thanks­giv­ing, nor have ma­jor de­part­ment-an­chors that typ­i­cally drive early traf­fic.

No mat­ter when they shop, cus­tomers will be hunt­ing for bar­gains. While a sur­vey of about 1,000 US con­sumers by Alix Part­ners in­di­cated that 83 per­cent of shop­pers ex­pect to spend about the same or more this hol­i­day sea­son, mo­bile phones are mak­ing price com­par­isons sim­pler than ever.

Marvin El­li­son, J.C. Pen­ney Co’s chief ex­ec­u­tive of­fi­cer

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