Black Friday weekend spending drop pressures U.S. profit

Thanksgiving Openings

The retailers also have tried to take Black Friday -- so- named because of the myth that retailers didn’t become profitable until the day after Thanksgiving each year -- and extend its marketing power to the surrounding days. This year, major chains such as J.C. Penney Co. and Macy’s opened on Thanksgiving for the first time.

While all this hasn’t persuaded shoppers to spend a lot more, it has given them the perception that deals are always available, Goyal said. That thinking has made the doorbuster bargains associated with Black Friday less effective at getting people to buy beyond one heavily discounted item.

This kind of so-called mission shopping, where a consumer buys one bargain-priced item and then leaves, will hurt profit margins, Goyal said. It may also explain why the number of shoppers increased and their spending fell, she said.

“That’s really bad for retailers,” Goyal said. Historically, Black Friday deals used to be the best of the year. Now that there are only a few items like that, consumers “are buying those and walking out the door.”

Mission Shopping

Jackie Brathwaite did just that on Black Friday as she went out looking for a television. She researched on the Web then decided to go to a Best Buy store in Brooklyn at around 7 a.m. It was sold out there, so she went to a nearby Target location and bought the next option on her list, a 24-inch Westinghouse model for $150, as her only purchase.

“I just wanted a TV,” Brathwaite, a 50-year-old Brooklyn housekeeper, said on Black Friday. “That’s it.”

The early promotions also damped sales during the Black Friday weekend by pulling purchases to earlier in the month, NRF President Matt Shay said on a Dec. 1 conference call with analysts.

In one of the other early reads on results, sales at brick-and-mortar stores on Thanksgiving and Black Friday posted an estimated 2.3% gain to $12.3 billion, according to a report from ShopperTrak, the Chicago-based research company. The results were in line with ShopperTrak’s prediction for holiday purchases to gain 2.4%, the weakest since 2009.

Traffic Rises

With more stores opening on Thanksgiving, sales were pulled forward from Friday, Bill Martin, ShopperTrak’s founder, said in a telephone interview. Sales on Friday fell 13.2% from last year, with foot traffic down 11.4%. Foot traffic for the combined Thanksgiving-Black Friday period rose 2.8% to more than 1.07 billion store visits, ShopperTrak said.

“The consumers really responded to Thursday’s openings, actually more than anybody anticipated,” Martin said.

The continued rise of e-commerce also may have kept some shoppers at home. Total e-commerce sales reached $20.6 billion in the first 29 days of this holiday season, ComScore Inc. said yesterday. That’s about 3.1% more than the period from Nov. 1 to Black Friday last year, the research firm’s data showed. The 2013 numbers include a few more shopping days because Thanksgiving fell on a later date this year.

<< Page 2 of 3 >>

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome