Black Friday Crowds Were Bigger, But On A Budget - Twice

Black Friday Crowds Were Bigger, But On A Budget

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Traffic may have been up over Thanksgiving weekend, but shoppers left fewer dollars on the table, surveys show.

Based on a poll by the National Retail Federation (NRF) and BIGresearch, average total spending over the weekend dropped to $343.31 per person, from $372.57 a year ago.

ShopperTrak, a Chicago-based retail research firm, described the traditional start of the holiday selling season as “a mixed bag,” with Black Friday sales essentially flat at $10.6 billion.

By comparison, sales on Black Friday 2008 grew a surprisingly strong 3 percent despite economic turmoil and the eventual spending lull that continued through December, the company said.

Tepid dollar volume can be attributed to a number of factors, including the weak economy, price deflation, the dilutive effect of pre-Black Friday sales events and more rational promotions. Indeed, industry rumors of $400 42-inch flat panels never materialized, and $99 Blu-ray Disc player promotions were fewer and farther between than anticipated.

Deeply discounted doorbusters on Black Friday included limited allotments of sub-$200 laptops at Best Buy and Walmart; a $78 Magnavox Blu-ray Disc player, also at Walmart; LG's 42-inch 720p plasma TV for less than $490 at numerous dealers, including J&R Music and Computer World; and front-load laundry pairs for a low as $500 at P.C. Richard & Son.

Nevertheless, most CE price drops were milder and more narrowly targeted than last year. According to Credit Suisse retail analyst Gary Balter, the average discount on TVs was about 13 percent at Best Buy compared to 24 percent in 2008, while TV prices fell only 14 percent at Sears, compared to 22 percent a year ago.

On average, U.S. retailers cut prices on LCD TV models 22 percent during the week of Black Friday, according to iSuppli, resulting in a 6 percent sales increase year over year. The El Segundo, Calif.-based market research firm and consultancy said 32-inch panels were the most commonly footballed screen size, with average U.S. Black Friday promotional pricing down 24.7 percent to $369, compared with $490 before the event.

Because their higher average selling prices allowed for steeper cuts during the promotional window, “Premium LCD TV brands, such as Samsung, LG and Sony, led the way in offering aggressive pricing deals on Black Friday,” said iSuppli analyst Tina Tseng. And according to Riddhi Patel, the firm's principal analyst for TV systems, vendors sweetened the pot by bundling their displays with Blu-ray Disc players, wall mounts, sound bars, free shipping offers and, in Sony's case, PlayStation3 consoles.

Nevertheless, Balter said pricing on better LCD TVs, netbooks and Apple products appeared to hold up over the weekend, and that tighter inventories together with more reasonable promotions should lead to improved profitability for dealers.

That was the game plan at Conn's, which was sitting on 25 percent less inventory than last year, but was still “extremely well positioned for Black Friday and the weekend” by buying narrow and deep on key SKUs, president/CEO Tim Frank told analysts during a third-quarter earnings call last month.

“Our merchandising team and accounting department did a tremendous job on inventory management,” he said. “We're much better positioned to take advantage of [Black Friday] than in past years. The nationals have limited SKU counts and customers leave disappointed, but we make sure the product is in stock and that we make a profit.”

Based on past years, Frank said Black Friday weekend could account for as much as 40 percent of total November sales volume, with 2.5 times more business on Thanksgiving Saturday than on a typical Saturday and 1.5 times more business on Sunday. “The consumer always comes out for sales events,” he said.

But whether or not retailers can maintain the Black Friday momentum through Christmas and avoid last year's post-Thanksgiving falloff remains to be seen.

“While retailers are encouraged by the number of Americans who shopped over Black Friday weekend, they know they have their work cut out for them to keep people coming back through Christmas,” said NRF president Tracy Mullin. “Shoppers can continue to expect retailers to focus on low prices and bargains through the end of December.”

But ShopperTrak co-founder Bill Martin believes even the slight 0.5 percent uptick in Black Friday sales is a positive harbinger for the industry. “We've seen a gradual retail sales increase over the last two weeks, and with Black Friday's performance it looks like November will be a positive month for retailers compared to last year, which is an encouraging sign,” he said. “As highlighted in 2008, [Black] Friday's relatively strong performance isn't always a bellwether for the entire season, but we believe the 1.6 percent increase we originally predicted for the holiday season remains intact.”

Gian Fulgoni, chairman of Internet market research firm ComScore, said the estimated $595 million spent online on Black Friday — an increase of 11 percent year over year — represented “a very encouraging start” to the online holiday selling season, spurred on by deep discounting and creative promotions that often leveraged social networking sites.

In a research note, Credit Suisse's Balter said Black Friday weekend results “appeared consistent with our call for a 1 percent increase in sales in this Christmas season … and a smaller percent of people said they were completed with their shopping, which points to a slight uptick for the season.”

“Although the economy is still very much hurting,” he added, “the strength of electronics points to a move into some wants from nearly all need last year.”

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