Friday is portent of season -- or not
Retailers are gearing up for the most eagerly anticipated shopping day, crossing their fingers that bargain-hunting masses will spend so much money the day after Thanksgiving the holiday season will be saved.
It’s an edgy time for stores as Americans worry about gasoline prices, mortgage payments, home values and credit-card debt. Consumers have been spending more this year than last but not enough more to make Nordstorm Inc. -- which Monday cut back sales expectations -- and other companies comfortable.
Across the country, sales at stores open a year or more, a key industry indicator, rose from February through October by an aggregate 2.3%, down from 3.7% in the same period last year.
“The whole industry will have to work very hard for a decent performance,” said Mike Niemira, chief economist for the International Council of Shopping Centers.
Lowe’s Cos., the nation’s second-largest home improvement chain, slashed its earnings forecast Monday too, blaming a steep “decline in housing turnover, falling home prices in many markets and a near-record inventory of homes for sale.”
The weak housing market also took the blame when housewares chain Williams-Sonoma Inc. said last week that third-quarter profit fell 7.1%. Another chain, Ann Taylor Stores Corp., cited “ongoing macroeconomic uncertainty” when it lowered its earnings expectations. Macy’s Inc. cut its fourth-quarter sales forecast by $100 million.
The high cost of gasoline weighs especially heavily on consumers, with pump prices up about 40% compared with this time last year, said Michael McNamara, vice president of MasterCard SpendingPulse, a retail data service. At the same time, the amount of gasoline being sold has fallen and that, he said, reflects on “consumer mobility.”
“Generally, when you cut down on consumer mobility, that tends to be a negative factor,” he said. “People aren’t making it out to stores.”
Although the day after Thanksgiving isn’t usually the busiest shopping day -- that is the Saturday before Christmas -- what’s known as Black Friday is closely watched by analysts and enjoyed by mobs of Americans.
Britt Beemer, chairman of America’s Research Group, said the crowds would be vast, with almost half of American consumers in stores. He predicted, though, that they would just dash in, grab a hot electronics item and get out, happy to have hit a good sale.
“I think you’re going to see a huge crowd on Black Friday but I just don’t think it will last long,” Beemer said. “I think Black Friday will roar in like a lion and go out like a lamb. If the retailers have enough people working in the stores, hopefully they won’t have a mass riot.”
Last year, police were called to a Best Buy in Costa Mesa about 3 a.m. to calm about 2,000 people, many eagerly awaiting the store’s 5 a.m. opening. This year, more retailers are expected to open their doors early so antsy customers won’t have to stand outside when they could be inside spending money.
At the Glendale Galleria, for instance, J.C. Penney and Mervyn’s will open at 4 a.m.
Although Black Friday won’t necessarily foretell how the overall season will unfold, it can be revealing for some segments of the industry, such as consumer electronics chains, which often have major door-buster sales.
These retailers “have become extraordinarily proficient at turning that day into a season unto itself,” McNamara said. “If we saw a somewhat disappointing Black Friday within the consumer electronics segments, I’d be more concerned.”
Projections about the day were all over the map. A SpendingPulse report predicted that total retail sales, excluding autos, would be $20 billion, compared with $19.1 billion last year.
The National Retail Federation, on the other hand, took a poll and found that 3% fewer people said they would shop over the long weekend than said they would last year. For his part, Niemira said he figured that 30% of U.S. households would hit stores over the weekend.
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