Retailers wait to see if economic concerns keep shoppers from Black Friday

 

Washington

Has the Grinch moved to Washington?

Retailers will soon find out if concerns over the so-called fiscal cliff and possible tax increases deter any shoppers from malls nationwide on Black Friday, the unofficial start to the holiday shopping season.

The National Retail Federation says holiday sales will rise 4.1 percent to an estimated $586.1 billion this year, 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 officer 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 Co. stores.

In an effort to lure shoppers into stores, malls have added such features as lounges, gift-wrapping services, 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 U.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 -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 got its name because retailers traditionally turned profitable on the day following Thanksgiving. While that is no longer true across the board, 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 one-third hitting the stores on Black 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 Stores, 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 is opening stores at midnight after Thanksgiving having done so for the first time last year. Kohl's, Staples and The Disney Store are among those offering "pre-Black Friday" specials.

Merchants that sell to teens can particularly benefit from earlier hours, according to John Morris, an analyst at BMO Capital Markets in New York. Most American Eagle Outfitters and Abercrombie & Fitch stores will open at midnight.

"It is literally a party, it is a teen party mob scene," Morris said. "These teens are going nuts over this stuff."

More than 180 of 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 spokesman for the Bloomington, Minn., mall. 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 decor 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, with their doorbusters and giveaways, create buzz, 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 Inc. in Chicago.

More than 130 petitions asking large retailers to forgo holiday hours have been introduced this year, according to Change.org, a website that allows activists to post petitions. That includes one from a Target worker calling for the Minneapolis-based discounter to revert to a 5 a.m. Black Friday opening that has garnered more than 350,000 signatures this year, according to the organization.

Wal-Mart workers demanding better pay and benefits have vowed to stage more than 1,000 protests online and outside U.S. stores this week. To gain leverage, protest leaders will have to turn out significant numbers of strikers and persuade bargain- hunters to go elsewhere. Similar protests in recent weeks have had little perceptible impact.

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.

Even without opening early, retailers will benefit from the maximum number of days possible — 32 _between Thanksgiving and Christmas this year, said Roseanne McCauley, vice president of the Americas for Experian FootFall, which tracks traffic and other data for retailers.

"People have two more paychecks coming in before the end of the month," she said.

Adding a sales day from Thanksgiving "is going to absolutely increase volume" for retailers, enabling them to stick to their planned schedule of markdowns, McCauley said. "At the end of the day, the hours are driven by the consumers."

 

— With assistance from Matt Townsend, Sapna Maheshwari, Renee Dudley and Elizabeth Dexheimer in New York, Cotten Timberlake in Washington and Ari Altstedter in Toronto.

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