Black Friday weekend drew good crowds -- of penny-pinching shoppers
By most measures, the weekend's sales were a success: $41.2 billion in merchandise went out the door, compared to $41 billion last year, according to the National Retail Federation. Stores were full, and registers rang, but the heavy traffic was offset by more penny-pinching shoppers, who are seeking discounts more than ever.
Very attractive sales -- ranging from $200 laptops at Best Buy (BBY) to buy-one-get-one-free cashmere sweaters at Gap's (GPS) Banana Republic stores -- cut retailers both ways: It kept the stores' haul down, but it drew shoppers out of their year-long funk. According to an NRF survey, consumers made 195 million trips to stores and websites over the Thanksgiving holiday weekend, up from 172 million last year. However, they spent an average of $343.31 each, down from $372.57 last year.
"Retailers were really focusing on lower price points to get customers into the stores," says Scott Krugman, the NRF's vice president of industry public relations. He notes that "loss leaders," such as small appliances for $3, were aimed more at increasing store traffic than reaping profits.
Buying for Themselves, Finally
Still, those discounts did manage to nudge some spare cash out of shoppers' pockets, notes NRF Vice President Ellen Davis. NRF's survey found shoppers weren't just buying housewares as gifts, but large numbers were replacing old items such as small appliances and linens they had put off buying for themselves. It's one of the first times this year when shoppers have opened their wallets to buy discretionary items, she says.
"Who can resist a $3 crock pot?" Davis asks. Consumers seemed to gravitate to those cheaper buys, "the items they could buy with the money that was already in their wallet," she says.
While most of the shopping patterns were the same as in past years -- clothing and books were the most popular gifts again, bought by 50.9% and 40.3% of shoppers, respectively -- there was spike in the toy department, where Wal-Mart Stores (WMT) and Target (TGT) have been locked in a $10-toy battle. The number of shoppers buying toys rose 12.9% above last year.
Toys 'R' Us CEO Jerry Storch told Reuters he was optimistic about the holiday after seeing the Black Friday crowds searching his stores for Zhu-Zhu Pets. After a long season of worrying that there were no must-haves, the robotic hamsters have emerged as the season's hot toy. But Storch says parents were also going for classics like Lego building blocks, in keeping with shoppers' new focus on affordable quality items.
Tiger Woods Had Company
Another sign of shoppers' frugality was their willingness to get out of bed early for a good deal. According to the NRF's numbers, 31.2% of Black Friday shoppers hit the stores by 5 a.m., compared to 23.3% last year. And 15% also shopped on Thanksgiving Day, either online or among the number of stores that started Black Friday a day early.
"It really looks like the early bird got the worm," says Davis. "Tiger Woods wasn't the only person out at 2 a.m. on Black Friday."
Best Buy CEO Brian Dunn told Bloomberg that Black Friday lines were longer than last year's and that traffic was heavier on the retailer's website. But Dunn also told The Wall Street Journal that "this is not a year where wallets are expanding."
And there's the rub: Shoppers are only coming out for the big discounts and then retreating until retailers put out some more bait. Some experts have warned that stores may get quiet again for a couple of weeks until retailers launch more sales closer to the holidays.
Better Prepared This Year
At least the shopping this weekend may not have cannibalized the rest of the season, according to NRF's survey. It showed shoppers said they had completed about an average 38.7% of their shopping, compared to 39.3% at the same time last year. That means there's still room for retailers to garner more sales, says Krugman.
"If they had completed more of their shopping, it would seem like retailers gave away too much. But the numbers show they're on par with last year," he said. Additionally, he noted that stores have prepared for Black Friday, buying cheaper items they could mark down to attractive prices. Also, they had cut costs all through the year so they could make a profit even on lower prices.
So while it wasn't a blowout comeback after a year of misery, Black Friday has probably put enough in the till to help retailers live to fight another day.