NEW YORK —
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 platforms. 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 dead.”