Holiday price cuts come early
Driven by surge in online shopping, many retailers are rolling out season’s deals well before Black Friday
The Thanksgiving turkey hasn’t hit the table yet, but the holiday shopping season is well underway in the minds of many retailers.
Walmart Stores Inc., Target Corp. and others have been aggressively advertising holiday specials online and in stores to get a jump on the spending spree that remains a key contributor to merchants’ financial health.
“Black Friday has become black November,” quipped Steve Barr, head of the U.S. retail and consumer sector at PwC, the accounting and advisory firm. That’s because so many retailers are rolling out their holiday price cuts well before Black Friday, once the traditional start of holiday buying.
Although Black Friday remains a big shopping day, its import has been eroded by ever-earlier bargains, the growing clout of online shopping and retailers’ fear that the other guy is getting a jump on them. That competition anxiety was behind the push five years ago to open stores on Thanksgiving Day, and merchants are proving again this year that they can’t open their physical stores early enough to launch the season.
Walmart, Kohl’s Corp., Toys R Us Inc. and several others plan to open on Thanksgiving again this year — some even earlier than in 2016 — a move that in past seasons drew grumbling from some consumers and retail employees unhappy with retail’s “Christmas creep.”
Brick-and-mortar stores are expected to lose more ground this year to the convenience of shopping by phone or computer.
E-commerce has become so pervasive that U.S. online retail sales this holiday season are expected to reach $107.4 billion this year, a 13.8% jump from last year and the first time they’ll top the $100billion mark, the research firm Adobe Analytics forecasts.
Altogether, U.S. holiday retail sales (those for November and December) should climb 3.6% to 4% this year, to as much as $682 billion, the National Retail Federation forecasts. The economy is helping. “The combination of job creation, improved wages, tame inflation and an increase in net worth all provide the capacity and the confidence [for consumers] to spend,” Jack Kleinhenz, the NRF’s chief economist, said in a statement.
And retailers are trying to cover every shopping preference and garner every possible sales dollar as they launch the holiday spending season, which can account for about 40% of a retailer’s annual revenue.
Indeed, it would be a mistake to confuse the woes of the retailers’ physical stores — which partly reflects that too many locations were built to survive the shift to online — with the notion that Americans no longer care as much to step foot in stores for “doorbusters” and other deeply discounted goods, analysts said.
After all, if online shopping is all the rage, why bother opening stores on Thanksgiving Day?
Because “a website can’t give you goose bumps” like those experienced in touching, buying and taking home the electronics, apparel and other goods bought during the holidays, Barr said.
“Let’s say you and I both want to buy a TV on Thanksgiving Day,” he said. “You go online and it’s going to be delivered in two to three days. I go to the store, get my TV and I’m home in an hour and watching it. It’s an emotional interaction, and that’s what they’re appealing to on Thanksgiving Day.”
The International Council of Shopping Centers, a trade group, said its latest survey indicated that 84% of shoppers on Thanksgiving weekend expect to head to stores.
And 85% of the respondents said they expect that when they get there, their purchases will depend on deals or promotions.
That expectation of seeing tantalizing price cuts is partly the fallout from the surge in internet shopping, a segment in which the likes of Amazon.com have put huge downward pressure on prices.
Americans’ online purchases on Cyber Monday alone will climb 16.5% from last year to $6.6 billion, making it the largest onlineshopping day in history, Adobe estimates.
The term “Cyber Monday” was coined by staffers at the National Retail Federation in 2005 when they noticed a jump in online sales following the Black Friday weekend.
Many consumers at the time had relatively slow internet connections at home. It became apparent that when they returned to work or school Monday, where they had computers with faster internet speeds, they shopped online.
Retailers seized on the trend and began heavily promoting Cyber Monday as another day for major holiday discounts. And now, of course, fast internet connections are ubiquitous on smartphones, tablets and desktop computers.
This year, Adobe Analytics expects that purchases made on mobile devices such as smartphones and tablets will account for 54% of all e-commerce holiday sales — the first time they’ll surpass online sales made on desktop machines.
Target Corp. and Best Buy Co. were among the retailers that released Black Friday promotional prices on hundreds of items early in November — sale prices that will return on Thanksgiving Day and Black Friday.
Best Buy, for instance, was selling a 43-inch LG television at its “Black Friday price” of $279.99, which it claimed was a $150 savings.
Target and other retailers also heavily promoted “sneak peeks” of their Black Friday advertising fliers on their websites in hopes of luring consumers when Black Friday arrives.
Not every retailer will be open Thanksgiving Day, however.
Chains such as Home Depot Inc, Costco Wholesale Corp., Nordstrom Inc. and Marshalls are among those expected to stay closed Thanksgiving Day, according to BestBlackFriday.com, which tracks the industry.
Outdoor retailer REI Coop also will close its 151 stores for the third consecutive year on Thanksgiving and Black Friday, a span in which it urges its customers and 12,000 employees to “opt outside.” REI said its website also would not process any online orders those days.
That doesn’t surprise Pam Danziger, who runs the retail consulting firm Unity Marketing. “Many consumers want Thanksgiving to be a pure holiday,” she said.
But Danziger said many chains still opt to open Thanksgiving Day “because they’re desperate to squeeze every last dollar out of their customers,” she said. “They feel like they have to, because the pressure is so high right now to avoid letting their competitors get an inch on them.”
Barr said there’s another reason why retailers open Thanksgiving Day: It’s a way for them to persuade customers to return before Dec. 25.
“If you make that experience as enjoyable as possible in stores on Thanksgiving or Black Friday, they’ll be back later in the holiday season,” he said. “Shoppers never forget how you made them feel.”