Black Friday turnout expected to drop from last year as stores plan to open even earlier

November 21, 2012

Has the Grinch moved to Washington?

Retailers will find out this weekend whether concerns over the “fiscal cliff” and possible tax increases subdue shoppers as they flood malls on Black Friday, the unofficial start to the holiday shopping season.

The National Retail Federation says holiday sales will rise 4.1 percent this year, to an estimated $586.1 billion, compared with a 5.6 percent gain in 2011. Even though thousands of stores are opening earlier, 147 million consumers, or 5 million fewer than last year, plan to hit the malls this weekend, according to an NRF survey conducted by BIGresearch.

“We hear these guys on cable television with eerie music, talking about doom and gloom,” Mortimer Singer, chief executive of New York consulting firm Marvin Traub Associates, said in a telephone interview. “Consumers get nervous when this kind of stuff happens.”

To put them in a spending mood, retailers are opening earlier than ever and dangling discounts such as $7 board games at Target and $19 sweaters at Gap. Mindful that many shoppers plan to buy gifts online, Target and Best Buy are matching prices offered by online competitors such as Amazon.com, while some merchants are adding kiosks and mobile checkouts to integrate online and in-store shopping. Others have giveaways such as free family portraits in November at J.C. Penney stores.

In an effort to lure shoppers into stores, malls have added such features as lounges, gift-wrapping services and even child care, Joel Bines, a Dallas-based managing director in the retail practice at AlixPartners, said in a telephone interview.

The moves are “almost entirely related to the amount of business that has moved to the Web,” he said.

U.S. consumers, whose spending makes up about 70 percent of the nation’s economy, have coped this year with political uncertainty, higher fuel prices and, in the Northeast, the fallout from Hurricane Sandy.

There are signs of improvement, including rising home prices and a jobless rate that’s ducked under 8 percent in the past two months, the lowest since January 2009. Household confidence in the week ended Nov. 11 climbed to minus-33.1, the highest level in seven months, according to the Bloomberg Consumer Comfort Index, and has increased in 10 of the past 12 weeks. Still, that figure indicates that one-third of those surveyed hold a negative view of the economy.

Black Friday has become a powerful marketing tool and one of the busiest days on the U.S. shopping calendar. More than half of American consumers plan to shop during the holiday weekend, with about a third hitting the stores Friday alone, according to a survey conducted by the International Council of Shopping Centers, an industry group based in New York.

Thousands more stores are opening early this year, after a few chains tested the water last year.

Wal-Mart, the world’s largest retailer, will start its in-store specials at 8 p.m. on Thanksgiving, two hours earlier than last year. Gap, the biggest U.S. specialty-apparel retailer, is opening more stores, about a third of its total, mostly at 9 a.m. on Thanksgiving this year. Macy’s, which opened stores at midnight after Thanksgiving for the first time last year, will do so again this year.

More than 180 of the Mall of America’s 520 stores will open at midnight on Thanksgiving, an increase from 65 a year ago.

Stores that didn’t open early in 2011 “were bummed,” said Julie Hansen, a spokeswoman for the mall in Bloomington, Minn. Several stores that opened at midnight last year had surpassed their sales figures from the previous Black Friday by 4 a.m., she said.

Customers have long complained about seeing Christmas decorations in stores before kids had even finished devouring their Halloween candy, and retailers had traditionally saved their best come-hither deals for after Thanksgiving. More recently, though, some retailers began offering Black Friday deals online beginning on Thanksgiving and then opening stores on the holiday, and consumers followed.

“It’s unfortunate, but it’s just that constant creep forward — soon, there will be no Thanksgiving holiday,” Bines said. “The holdouts this year are next year’s participants. It’s just a question of who wants to push the envelope.”

Not everyone is a fan of the extended hours. While the holiday openings create buzz with their doorbusters and giveaways, the downside is that adding hours on Thanksgiving can damage employee morale and performance in the long run, said Paul Swinand, a retail analyst at Morningstar in Chicago.

Some merchants, including J.C. Penney and Staples, say they’ll remain closed on Thanksgiving because they don’t want to infringe on their workers’ time with family.

Bloomberg News

: The Black Friday shopping experience: Retailers expect more people to shop between Thanksgiving and Sunday, but retail chains such as Toys R Us and Gap are opening earlier and offering more markdowns, which could mean lower profits for most retailers.

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