Will Retailers or Consumers Come Out on Top on Black Friday?

Sears, Kmart and Others Begin Holiday Sales Ahead of Time as Shoppers Start Early Search for Deals

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BATAVIA, Ohio (AdAge.com) -- Black Friday 2009 has become a massive game of chicken among retailers and consumers, as the closely watched post-Thanksgiving sales data will largely decide who succeeds at outsmarting the other.

Consumers are planning more and earlier to get the best deals this holiday season, starting their shopping and online price comparisons weeks ahead of last year. Retailers, meanwhile, have been more conservative with inventory even if they're offering what some observers see as the best Black Friday deals ever, hoping to avoid big late-season and post-season markdowns. Black Friday will go a long way toward deciding which side comes out on top.

Google data show the upswing in searches for "Black Friday deals" started about two weeks earlier this year than last, beginning in October. Search on that phrase actually hit a short-term peak Nov. 13 and declined through last week, though it may pick up again this week. Experian Hitwise is now seeing searches for Black Friday starting as early as August.

Thriftier consumers are making Black Friday more important, said Kohl's CMO Julie Gardner. "The environment has never been more difficult," she said. "The interest, from a consumer standpoint, on how to be the smartest shopper will be amplified."

Interest is intense enough that the traditional boundaries around Black Friday and Cyber Monday (the Monday after Thanksgiving) are breaking down fast. Amazon announced last week it will begin Black Friday deals starting Monday Nov. 23, essentially a week before online retail's traditional "Cyber Monday" shopping peak. Black Friday, however, already had become an online phenomenon, with ComScore reporting last year that traffic to online retailers was up 98% over the previous year's Black Friday.

Circular leaks
Meanwhile, early online leaks of retailers' offline Black Friday circular ads have become so pervasive that Walmart, which for years has threatened to sue the small websites that preview them, finally relented last week. It let BlackFriday.info publish a leaked version of its entire Thanksgiving Day circular, though it still declines to confirm or deny its veracity. That came a day after Walmart confirmed six of its Black Friday prices to CNN.

Realistically, Walmart may have had to cave rather than lose buzz to other retailers that let their leaks flow more freely. Price wars over what might have once been "Black Friday" deals, such as books and Xbox 360 gaming consoles, broke out weeks ahead of Black Friday among Walmart, Amazon, Target and Sears.

Sears, sibling Kmart and Kohl's were among retailers that started rolling early "Black Friday" themed holiday sales in early November. These early deals, combined with signs of unusually early shopping and planning by consumers and surprisingly strong October sales numbers for many retailers, raises the question of whether retailers have stolen some of the thunder from Black Friday and Cyber Monday.

Sara Kleinberg, head of marketing for retail at Google, doesn't think so, pointing to survey research by Google and OTX showing 32% of consumers plan to do most of their shopping during Thanksgiving weekend. Another 40% plan to do so in early to mid December, according to the survey, based on data from the week of Nov. 2.

A poll by the International Council of Shopping Centers found 16% of shoppers plan to begin their holiday gift shopping on Black Friday, up from 10% last year.

By all appearances, the deals, including LCD HDTVs from Walmart and Target for $248 and $246, respectively, $3 small appliances at Target and a $59 Garmin GPS at Walmart, are better than ever, said Scott McCallum, managing director-shopper marketing at Ogilvy Action. But the question is how successful retailers will be at getting people they lure in with sweet deals to buy higher-margin items, and whether consumers will have anything left to spend by mid-December.

"We are definitely seeing more people shopping from lists," Mr. McCallum said, "and less impulse shopping." Adding to consumer discipline, he said, is that more people plan to buy holiday gifts with cash, not credit.

Layaway has accordingly gotten new life, particularly among retailers looking to differentiate themselves from Walmart, which did away with it more than two years ago. Sears, Kmart and Best Buy are among retailers that have added online layaway this year. Google actually shows a steady increase in searches for "layaway" plans the past five years, with an 8% increase this September-November period vs. a year ago and a 40% increase in searches for online layaway.

Seemingly Black Friday and the holiday season should be better for retailers this year, if only because last year's same-store sales were so dismal. Going into this holiday season, most retailers were reporting surprisingly strong sales momentum in October or the third quarter, with Walmart -- last year's standout -- being one of the few to see deceleration this year.

Dismal projections
But most projections for overall holiday sales are gloomy. The National Retail Federation forecasts a 1% decline. Nielsen's annual holiday retail survey fielded at the beginning of November found 42% of respondents plan to spend less than a year ago vs. only 4% who plan to spend more. NPD Group was slightly less gloomy, with a 30% to 11% split.

While it's clear people have done more research online in advance of the holiday season, it's far less clear they'll be buying more online as some may trade the convenience of online shopping for deals they hope to find on Black Friday in stores.

Research released last week by Digital Research and ThinkVine showed 39% of consumers plan to spend less online this holiday season, compared to 20% who said they'll spend more. That jibes with Nielsen's survey, which found the percentage of consumers who plan to do at least some holiday shopping online declined 10 points to 63%.

On the other hand, Forrester projects online retail sales will actually rise 8% this year, breaking out of a funk that saw third-quarter e-commerce sales down 2% according to ComScore. One factor in favor of the online retailers, according to Forrester, are those tight offline inventories retailers are using to avoid late markdowns, which could drive people online to find what they can't in stores.

Either way, freebies will be big drivers of online success, as Google reports strong double-digit increases in searches for free shipping and coupon codes.

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