Black Friday

November 28, 2008
Retailers Offer Big Discounts, and Then Pray

Black Friday, long the Super Bowl of shopping, is at hand, but it may have become nearly irrelevant. Check out the deals that were already on offer earlier this week:

Diamond earrings at Macy’s were chopped to $249 from $700. A Marc Jacobs bag at Saks, originally $995, fell to $248.45. And for men, a Ted Baker suit at Lord & Taylor was selling not for the usual $895, but for $399.99.

Such crazy prices are a sign of the times, and analysts expect many more such deals during one of the toughest holiday seasons in decades.

Laden with excess inventory, hungry for sales and worried because of five fewer shopping days between Thanksgiving and Christmas this year, the nation’s retailers went into a price-cutting frenzy long before the day after Thanksgiving, the traditional start of the holiday shopping season. For weeks, they have been trying to outdo one another to capture the attention of consumers who have become numb to run-of-the-mill discounts. As the latest T. J. Maxx slogan goes: “Every day is Black Friday.”

In fact, retailers have had so many early “doorbusters” — jaw-dropping deals usually reserved for Black Friday — that “it’s almost not necessary to get up at 5 in the morning,” said Bill Dreher, a senior retailing analyst with Deutsche Bank Securities.

But the retailers are just getting warmed up.

The Toys “R” Us chain is planning the deepest discounts in its history on Friday, with 50 percent more doorbusters than last year. Other retailers are promising that their deals will be even more striking than the sales they have already unveiled — with Wal-Mart, for instance, promising large flat-panel televisions for less than $400.

Such bargains are likely to set the tone for the shopping season to come.

“There’s no reason to suspect this will end,” said Dan de Grandpre, editor in chief of Dealnews.com, which has been tracking Black Friday deals for about a decade. “This kind of heavy discounting will continue until we see some retailers start to fail, until they start to go out of business.”

Indeed, the intense competition could erode profits at many chains. Some retailing analysts even fear it could condition consumers to shop only when merchandise is deeply discounted.

Still, stores plan to pull out all the stops on Friday and through the weekend. After all, November and December sales make up 25 to 40 percent of many retailers’ annual sales, according to the National Retail Federation, an industry group. (The day after Thanksgiving is called Black Friday because it was, historically, the day that many retailers moved into the black, or became profitable for the year.)

The deals were laid out in circulars tucked into newspapers on Thanksgiving Day, on retailers’ Web sites and on sites dedicated to sales and shopping strategies, like bfads.net and gottadeal.com. Many stores planned to open just after midnight Friday morning, and others — including Wal-Mart, Sears, Macy’s, Best Buy, Circuit City, Toys “R” Us and Old Navy — set their openings for 5 a.m. Target will open at 6 a.m. and BJ’s Wholesale Club at 7 a.m.

Consumers have been resisting the stores’ entreaties. In the first two weeks of November, retail categories like apparel, luxury goods and electronics and appliances all had double-digit sales declines, according to SpendingPulse sales reports from MasterCard. Grocers are just about the only stores doing well in this economy, as people hole up and eat at home instead of going to restaurants.

“If you’re in a sector that doesn’t sell food, you’re under a lot of pressure,” said Michael McNamara, vice president of SpendingPulse.

Projections vary about the likely success of this year’s Black Friday and the days following. A National Retail Federation survey said fewer people planned to shop this weekend — as many as 128 million, down from about 135 million who said they planned to shop Thanksgiving weekend sales last year. But a survey from the International Council of Shopping Centers found the opposite, that more people plan to shop this year.

Retailers are hoping for the best.

“This year I expect it to be bigger than ever,” said Gerald L. Storch, chairman and chief executive of Toys “R” Us. Citing the down economy, he explained: “I believe it will be huge because Black Friday is all about bargains.” ...


(Full story at nytimes.com)