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Retailers Locked And Loaded For Black Friday, But Will It Be Enough?


If this month’s flood of pre-Black Friday
promotions, free-shipping offers and extended shopping
hours seems desperate, it is.

While the CE industry has stabilized from the freefall
of 2008, retail filings and research reports paint a
picture of a flat to slightly positive fourth quarter, as job
concerns and the depressed housing market continue
to keep consumer demand in check.

In an effort to drive traffic and jump-start sales, CE
retailers and manufacturers will once again play the
price card Thanksgiving weekend. But with some preholiday
sale prices already approaching cost in key
categories, merchants fear that even doorbuster specials
may lose their allure and diminish Black Friday’s
role as the linchpin of the holiday selling season.

“Black Friday started at the beginning of the year,”
observed Tom Galanis, operations VP at Sixth Avenue
Electronics. “Every day’s a sale day. We’ve devalued
everything and there’s no bottom. We just make it official
after Thanksgiving.”

Contributing to the hypercompetitive environment
were anemic TV sales this autumn. Bill Trawick, president
and executive director of the $5 billion NATM
buying group, found that especially disconcerting after
last year’s considerable unit volume gains, which were
driven largely by closeout buys.

“In the past we’ve seen growth in TV steadily building
in September and October, but the trend has already
changed,” he noted. “The only thing that can drive it is
if prices get any crazier than they already are” — which
would be tantamount, he said, to “giving it away.”

Trawick’s TV take was echoed in
tepid third-quarter compstore
sales by big-box
chains. Comps were
flat at Lowe’s, fell 1.3
percent at hhgregg,
and slipped 1.5 percent
at U.S. Walmart stores,
while Costco said samestore
sales of CE slid by
the low single digits in October,
dragged by a midteens
percentage drop in
TV unit volume.

The weak pre-holiday environment
was also reflected in the U.S. Census
Bureau’s monthly retail sales report for October,
which showed a 3.6 percent increase for the CE and
appliance channel over the prior year, but a 0.7 percent
decline from September.

Trawick attributes slackened TV demand to flatpanel
saturation in family rooms, and satisfaction with
older, secondary CRT sets. But the larger issue he
said, which has also reverted major appliances to a
replacement business, remains the precarious job and
housing markets. “It’s a very, very tough environment,”
he observed.

Retail executives concurred. In a recorded statement,
Mike Duke, president/CEO of Wal-Mart Stores,
said “Our own surveys and the reports on the recent
U.S. election cycle indicate that financial uncertainty
still weighs heavily on everyday Americans, including
many of our core customers.”

hhgregg chairman Jerry Throgmartin went further,
describing the business environment as “one of the
most challenging and volatile I’ve seen in my 33 years,”
during a conference call this month. Despite stabilizing
somewhat since the summer, the industry continues to be impacted
by “significant
headwinds,” he told analysts.

But hhgregg is hopeful that lower prices and
compelling vendor promotions for 3D TV, IPTV and
larger-screen LEDs, beginning Black Friday and continuing
through Super Bowl, will help get opportunistic
shoppers off the sidelines. President/CEO Dennis
May told analysts that an oversupply of TVs and weak
demand for new video technologies led to the price
drops, and that vendors have resumed their marketing
support for the fall and holiday season.

A decrease in 3D TV retails, to a $1,199, $1,299
and $1,499 step, “moves compelling product into a
power alley price point,” he said, while still providing
solid margins and moving consumers away from a
$499 purchase.

“Consumers are sitting back and waiting,” he said,
“waiting for Black Friday.”

NATM’s Trawick agreed. Manufacturers have developed
“really strong programs,” he said, including 3D
bundles featuring a movie, a Blu-ray Disc player, and
two or even four pairs of glasses. Pricing will also be
aggressive on BD players and TVs, with 32-inch sets
hitting a $199 price point.

To help prime the pump, retailers including Sears,

, Walmart and Best Buy held weekly
pre-Black Friday sales events starting as early as Halloween. In addition, Sears, as well as hhgregg,
Lowe’s, Sam’s Club and Staples, telegraphed some
of their doorbuster specials through media and socialnetworking
announcements (see chart, this page) to
whet consumer appetites and stake their claim to post-
Thanksgiving traffic.

Other enticements include free-shipping offers
of varying latitude from the online wings
of Walmart, Best Buy, J&R Music
World and Target;
extended shopping
hours which, for Sears
and Kmart, will include
Thanksgiving Day; and all
manner of mobile shopping
apps for the iPhone and Android
But after all is said and
done, the holidays will still be
won or lost on price. “Walmart
U.S. will be the price leader
throughout the holidays,” CEO
Duke warned, while a new poll commissioned
by the International Council of Shopping Centers
(ICSC) and Goldman Sachs shows that 31 percent of
all households plan to shop on Black Friday, up from
26 percent in 2009.

NATM, which includes some of the nation’s largest
regional chains including P.C. Richard & Son and Nebraska
Furniture Mart, is hoping to get its fair share of
that traffic. “Some of our members are aggressively
promoting,” Trawick said. “We won’t roll over and play