NEW YORK — When it comes to Black Friday promotions, retailers are damned if they do and damned if they don’t.
Just ask Wal-Mart. As part of its newfound focus on earnings over sales volume, the company intentionally scaled back on the kind of door-buster discounts that triggered stampedes and fistfights in its aisles last year.
But absent the $20 DVD players and, Wal-Mart believes, aggravated by high energy prices, same-store sales came in below its already lowered expectations this past Black Friday, prompting the world’s largest retailer to re-think its strategy. The upshot: Look for Wal-Mart to reclaim its role as the loss-leader leader for at least the remainder of the holiday selling season.
The story was somewhat different for CE specialty chains, which benefited from a dearth of must-have apparel or hit toys. Despite a somewhat more rational approach to the Thanksgiving weekend —discounts were deep but narrower — shoppers flocked to early-bird specials like swallows to the Mission San Juan Capistrano. The difference, however, was that their mission was more akin to a surgical strike: swoop in for the deals and leave.
As a result, sales swelled on Black Friday but retreated the rest of the weekend, resulting in mediocre November comps. According to the International Council of Shopping Centers (ICSC), retail sales for the seven days ending Nov. 27 actually declined 1.5 percent from the prior week, belying the volume-boosting power of post-Thanksgiving promotions.
“As the ‘traditional’ holiday selling season got underway on Friday, consumers headed to those retailers who provided promotions and discounts,” said Michael Niemira, ICSC’s chief economist and director of research. “It appears that sales on Black Friday were strong, weakened on Saturday and posted a moderate gain on Sunday,” prompting the group to lower its sales expectations for the month.
The National Retail Federation (NRF) was similarly reserved in its weekend assessment, preferring to point to the big seasonal picture. “Retailers know that the holiday season is not a sprint. It’s a marathon,” said NRF’s president/CEO Tracy Mullin. “Black Friday weekend is just the beginning of a month-long race to the finish line.”
Indeed, the NRF believes that the weekend’s revenues, which it pegged at $22.8 billion, represented only 10 percent of the expected $220 billion in total holiday sales this year. And, reminds retail analyst Dan Wewer of CIBC World Markets, the season is way longer for CE retailers, with January being their second biggest month of the year after December.
CE stores should also reap the benefits of high consumer preference, if Black Friday shopping patterns were any indication. According to an NRF poll, electronics was the third most-sought-after category, after apparel and entertainment software, with some 31.2 percent of shoppers making a CE purchase that weekend. The same held true online, where CE and majap sites saw the biggest boost in traffic on Thanksgiving Day, according to research firm Hitwise, and sales of CE surpassed books for the first time on Amazon.com.
Retail consultant Kurt Barnard concurred. “It’s going to be a strong holiday for retail, but a bang up season for electronics stores,” he predicted.
That still begs the question of Black Friday’s role in stimulating sales. Ray Burke, a professor of business administration at Indiana University’s Kelley School of Business, believes it’s overrated.
Partnering with a “major consumer electronics retailer,” his team studied shopper behavior at two Midwest stores last year which mirrored the demographics of the U.S. population. His conclusion: Conversion rates averaged only 31 percent on Black Friday — lower than the previous weekend — due to crowding, long lines, an overwhelmed sales staff and out-of-stocks.
2004: A Black Friday Odyssey
By Steve Smith & Alan Wolf
NEW YORK — All you had to do was look at the parking lots.
But actually elbowing into several popular electronics/appliance stores in Queens, N.Y., and central New Jersey on Black Friday confirmed the success of their post-Thanksgiving sales.
A Best Buy location in Long Island City was packed, but sales manager Ralphie Gonzalez said store traffic had “died down” by 12:45 that afternoon, compared to the morning rush that began at 6:00 a.m.
Gonzalez described his location as Best Buy’s “No. 1 revenue-producing store in our district,” and reported that sales were “strong for the weekend before [Black Friday] and strong across the board today.”
While MP3 players and CD and DVD software were hot, two items sold out that morning: a $500 Toshiba notebook computer that was featured on the front page of Best Buy’s Black Friday circular, and a $17.99 DVD player by Norcent.
“Digital cameras have also been very hot,” Gonzalez noted. Among the more popular units advertised was a 4-megapixel Kodak with 4x optical zoom priced at $149.99 and a 5.1-megapixel Sony with 3x optical zoom for $299.99.
And while HDTV sales were generally “great” on Black Friday, as well as the week leading up to Thanksgiving, what received a lot of attention from Gonzalez’s customers was a $1,600 42W-inch plasma display panel by Maxent.
TWICE next visited a P.C. Richard & Son, located less than a mile away on fabled Steinway St., one of the largest shopping districts in the city. At 1 p.m. that afternoon, assistant manager Roland Pelletier reported that “Plasma and LCD displays are selling well today, as is anything for gift giving” — specifically “grab-and-go items” like digital cameras and MP3 players.
Like his neighboring Best Buy, Pelletier observed that “sales from the previous weekend were good and that has continued.”
Circulars brought in business by promoting a 30W-inch Samsung flat tube HDTV for $788.97, a Sharp microwave oven for $38.97 and a Compaq notebook with 1.3GHz processor for $699.97 after rebate.
While major appliances were also touted by the chain, which is known for its white-goods expertise, the day belonged to CE shoppers. “Black Friday is really about electronics,” Pelletier said, “although appliance sales have been good too.”
The scene was similar in central New Jersey, where a shivering crowd began forming in front of the Eatontown Circuit City before 5 a.m. Unlike prior years, no complimentary coffee and doughnuts were offered.
Darryl, 32, an “early riser” who has alternately camped out at Circuit City and Best Buy for the past five Black Fridays, arrived at 4:30 a.m. to ensure his share of 12-volt and DVD player specials.
“My wife said I was crazy,” admitted Jim, 50, who staked out his spot at 4 a.m. in pursuit of a $500 HP notebook and a $7.99 Belkin wireless router.
Rich, 21, was planning to “pick up some $17 DVDs as gifts” and buy the $500 notebook as a graduation gift to himself. “I’d rather be in bed, but I’m here for the deals,” he explained.
Ed, 37, took turns on line with his wife Sue, who was thawing out in the car. “She’s building her own PC and we’re here for the components,” he said.
The store manager and several associates appeared at 5:10 to hand out vouchers for key sale items, answer questions and solicit credit card applications. The first person on line became the first to leave after she was informed that the advertised $149.99 Playstation2s never arrived — at any chain — due to a “supplier issue.”
A quarter of a mile down the road at the next strip mall, 6th Ave. Electronics’ store manager John Tarantino and assistant store manager Boris Simsek were making last minute preparations for the 7 a.m. crush, while some 75 shoppers shuffled outside. “So far this season we’re tracking 15 to 20 percent over last year, and the crowd outside is much better,” Tarantino said. “We’ve got better advertising, and people are feeling more comfortable about the economy,” Simsek suggested.
By 8 a.m., the electronics department at a nearby Target was frenzied. Shoppers, mostly female, were piling $97 Samsung digital cameras and $167 Kawasaki portable DVD players into gridlocked shopping carts while a security guard eyed the commotion at the opened video game glass displays.
“The lines at Best Buy were too long,” one customer told TWICE. “So I came here and the prices are just as good.”
She was right about the lines. At 9 a.m., three hours after the nearest Best Buy opened its doors, the check-out queue snaked all the way to the appliance department, in the farthest corner of the store. Associates offered the captive audience candy and assorted deals: $5.49 headphones; discounted DVD media; and a chance to cut the line with the purchase of three subscriptions to assorted ISPs, magazines, or game and DVD delivery services.
“We’ve already sold through a lot of our door-buster inventory,” reported general manager Kevin Dugan. Like his Queens counterpart, he cited the $500 Toshiba notebook and the $17.99 Norcent DVD player as best-selling ad items. “The Napster MP3 players also went fast,” he said.
Door-Busters: How Low Did They Go?
NEW YORK — While the breadth of Black Friday’s discounts was noticeably diminished from last year, CE retailers still managed to draw predawn crowds with a narrower selection of sharply promoted eye-openers.
Here’s a sampling of last month’s early-bird specials. — Alan Wolf
Emachines desktop PC system (2.66GHz, 512MB, 80GB, DVD/CD-RW, 17-inch CRT monitor), $199.98*
Toshiba notebook computer (1.4GHz, 256MB, 40GB, DVD/CD-RW, 15-inch screen), $499.99
T.D.E. Systems 5-inch portable DVD player, $ 99.99*
Belkin802.11g wireless cards, $4.99*
Akai 42W-inch RP-CRT HDTV monitor, $699.99*
HP, D-Link notebook computer (1.3GHz, 256MB, 30GB, DVD/CD-RW, 15-inch screen, with 802.11b wireless card), $499.99*
Magnavox 15-inch LCD-TV, $287.00
Nintendo Game Boy Advance SP, $49.99**
$10 reward card, free (first 200 customers)
Digitrex 3-megapixel digital camera, $ 49.99
Toshiba 46W-inch RP-CRT HDTV monitor, $999.99
PNY 256MB 2.0 USB drive, $9.94*
Proview 17-inch LCD monitor, $198.94*
Trans World Entertainment (FYE, Coconuts):
CyberHome Progressive scan DVD player, $ 14.99*