A Black Friday Death Spiral for Retailers
Life + Money

A Black Friday Death Spiral for Retailers

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This article by Carol Kopp originally appeared on Minyanville.

A couple of guys are camped out in the parking lot of a mall outside Pittsburgh, having arrived last Friday in order to be first in line when Best Buy (NYSE:BBY) opens its doors for Black Friday sales. They had hoped to set a nationwide record, but have since learned that some people showed up even earlier at one of the stores in California. They feel that this is cheating, since winter camping is a lot easier on California’s early-bird shoppers.
They have clearly bought into the concept of Black Friday as a competitive sport, but it’s worth asking exactly what Best Buy or any other retailer hopes to get out of the ever-spiraling competition for Black Friday sales. By the way, those “Black Friday” sales started on Monday, Nov. 19, on the Web, and in the real world will begin as early as 8 p.m. on Thanksgiving Day.
After four dismal years of recession, a number of prognosticators have at least a modest degree of optimism about the holiday season ahead. But one reason expectations are modest is that retailers have conditioned consumers to respond to deals. Few will respond as enthusiastically as those guys camping out in Pittsburgh, but we sure have gotten the message that full retail is for suckers.

Accenture, a management  consulting firm, says 53 percent of American consumers will shop on Black Friday, up from 44 percent last year. That’s enough to inspire major retailers including Target (NYSE:TGT), Wal-Mart (NYSE:WMT) and Sears (NASDAQ:SHLD), to throw open their doors at 8:00 p.m. on Thanksgiving. Macy’s (NASDAQ:M) and Kohl’s (NYSE:KSS) are sticking with their midnight opening, which is pretty much the “new normal” for Black Friday.
Online retailers have jumped in with their own pre-Thanksgiving deals.

Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) both launched their Cyber Monday sections a week early.
Retailers who have both real-world and Web stores are effectively competing against themselves. Target.com has an online “Beat the Rush” sale, Walmart.com is advertising its “Pre-Black Friday” event and Sears.com is offering “Doorbusters Now.”
They’re all in a pretty pickle, really. Having taught consumers to respond to deals, all they can do is cut their prices earlier and more often.

In a survey by the social network HatchedIt.com of its tech-savvy female membership, 55 percent said they will spend less in this holiday season than they did last year, and most say their shopping strategy will be dictated by the availability of coupons. In a column for Forbes.com, a co-founder of the site suggests that consumers are so conditioned to “daily deals” that they won’t shop without them.
An interesting side note is the prediction that the best-placed retailers are those that operate in both worlds, the real one and the Web. It seems that mall stores now exist as three-dimensional billboards for retailers’ Web sites.
In its 2012 Online Shopping Forecast, Adobe (NASDAQ:ADBE) predicts 12 percent growth overall in online shopping in the US and Europe, for a total $2 billion in sales. But the Adobe study concludes that “brick-and-click” retailers will get bigger spikes on the major shopping days than online-only stores. It sees online-only retailers jumping 210 percent on Cyber Monday, but “brick-and-click” retailers more than doubling that, for a 540 percent increase.
Mobile tie-ins also are expected to be a bigger part of holiday shopping this year. The Adobe study projects it will increase 110 percent over the 2011 holiday season, to make up 21 percent of total online sales.
The forecast indicates that Cyber Monday, Nov. 26, will be the biggest shopping day again this year, followed by Black Friday, November 23. But here’s your shopping tip from Adobe: Forget Black Friday, and Cyber Monday, too. The best online deals come later, on the week before Christmas, when they get desperate. And the very best day of all may be Free Shipping Day, which some kind of marketing Mafia has dictated will occur on Dec. 17.

Adobe says its projections are based on analysis of 150 billion site visits by Adobe retail customers over the past six years.

Last month, the National Retail Federation issued a report concluding that overall holiday sales would grow 4 percent this year, to $586.1 billion. That forecast, based on government economic statistics, is its most optimistic since the recession began. Shop.org, a division of the federation, expects 12 percent growth online, to “as much as” $96 billion.

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