Blockbuster Black Friday may be anomaly

December 1, 2011

Black Friday once was a bellwether for the economy. Now, experts say, it’s become an anomaly.

This year, record crowds showed up at shopping centers across the country at midnight on Thanksgiving — or even earlier — with their wallets open, ready to spend. But the short-term surge in sales masked consumers still facing a long road to recovery. Many of the nation’s largest retailers revealed on Thursday that sales during the rest of the month were mediocre at best.

“I don’t know that Black Friday sales are such a great thing,” said Paul Lejuez, senior analyst at Nomura Securities. “It may speak to people just needing to shop the bargains. . . . There’s an aspect of necessity that makes me nervous.”

In fact, several industry experts said Black Friday is turning into a black hole, sucking up sales from the weeks surrounding the big day. The National Retail Federation estimated that Americans made a historic 226 million shopping trips during the weekend after Thanksgiving and spent more than $52 billion. Traffic jumped 5 percent over last year, according to research firm ShopperTrak.

But the blockbuster performance may have simply reflected consumers lying in wait for a good deal. The International Council of Shopping Centers, a trade group, said retail sales the week before Thanksgiving dropped a significant 0.9 percent. Analysts said they are waiting to see whether this year’s Black Friday buzz also stole sales from December.

“Unless the retailers have some big surprise in store, then consumers are going to say, ‘Alright, we did this, and now we’re gonna wait until something else comes out,’ ” said Mike Moriarty, a partner in the retail practice at A.T. Kearney, a global management consulting firm.

Several big retailers reported unexpected sales declines in November. Kohl’s reported that sales at stores open at least a year — a key measure of retail health — dropped 6 percent compared with a year ago despite stronger performance over Thanksgiving weekend. Chief executive Kevin Mansell called the results disappointing. J.C. Penney said its decision to open stores at 4 a.m. the day after Thanksgiving rather than midnight contributed to its 2 percent decline.

At Target, chief executive Gregg Steinhafel declared the cheap chic chain’s first-ever midnight opening a success. But it was shoppers buying food — not toys and electronics — that helped lift the company’s monthly sales 2 percent. Rival Wal-Mart does not report monthly sales.

Overall, national retailers reported a little more than a 3 percent increase in sales during November, the slowest growth since March, according to the ICSC. The results amount to a reality check for the industry — and for an economy driven by consumer spending.

For several months, economists have warned that consumers were on the verge of tapping themselves out. Spending had been outpacing income growth until October, when it moderated slightly. That drove down the personal savings rate to the lowest levels in four years.

Black Friday-style surges in spending are not sustainable, economists say, without an improvement in the jobless rate.

“Holiday shoppers are looking for good deals, and the days of throwing caution to the wind are long gone,” said Chris G. Christopher Jr., senior principal economist for IHS Global Insight.

Still, the NRF forecasts the holiday season will pull off a modest 2.8 percent increase in sales, less than last year’s more than 5 percent gain but just above the 10-year average. And some retailers said sales were strong throughout November. Macy’s reported a nearly 5 percent boost from a year ago, while Limited Brands said sales at its Victoria’s Secret stores were up 11 percent.

Car dealers also had strong results last month, as industry sales jumped 14 percent from a year ago, according to Autodata. Sales at Chrysler soared 44 percent, the most of any automaker, followed by Kia and Volkswagen.

“I think consumers are going to invoke their retail therapy,” said Alison Paul, retail and distribution leader at consulting firm Deloitte. “Shopping is America’s pastime.”

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
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