As shopping season expands, is Black Friday dead?

8:59 AM, Nov 9, 2013   |    comments
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With more retailers shifting the start of their big holiday pushes to Thanksgiving, it prompts the question of whether Black Friday even exists in the traditional sense.

Macy's, J.C. Penney and Kohl's are the latest retailers to hop on the Thanksgiving bandwagon to stay competitive in an increasingly promotional retail landscape. E-commerce deals are starting earlier, too, with Wal-Mart Stores kicking off its online promotions Friday, a month earlier than usual.

Black Friday, which in the past has kicked off the holiday shopping season, got its name for being the day retailers hope will turn them from unprofitable (in the red) to profitable (in the black).

"Black Friday has reached unplanned obsolescence, and (on) Black Saturday and Sunday the stores get more and more deserted," said Burt P. Flickinger, managing director at SRG Insight, a retail consulting firm. "By moving sales to Thursday, Black Friday loses its retail relevance."

The creep from Friday to Thursday began in 2010, when Sears opened on Thanksgiving. Wal-Mart moved Black Friday to the holiday in 2011, and Target followed last year.

As this trend amplifies, Black Friday is quickly becoming "a relic of years gone by," said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors.

The transition also pressures retailers to have stores open and generating sales in an increasingly competitive market, he added.

"That's why I think you're going to see more retailers announce they'll be open," Sozzi said. "You have to capture the traffic in the mall because you don't know when it will return. It's a cascading effect."

Cyber Monday-increasingly popular with time-pressed, crowd-wary shoppers-is also squeezing Black Friday. For the first time, an American Express survey found that more shoppers plan to participate in the former than the latter.

Bill Martin, founder and executive vice president of ShopperTrak, said that the "lines are beginning to blur" for the holiday season.

"We're seeing more and more promotions earlier in November out of fear of the consumer's running out of money," he said. "They're trying to get to that wallet as soon as possible."

Although Thanksgiving is growing in importance and now starts many retailers' major pushes, Martin stressed that Black Friday still tops other days in terms of sales. ShopperTrak forecasts that Black Friday will be the busiest shopping day this year for sales and traffic for the 10th straight year.

Expect coal this season

Surveys and forecasts indicate that this season could be particularly Scrooge-like for retailers.

In a recent report, Morgan Stanley analysts forecast the weakest holiday sales and the most promotional season since 2008.

Nearly 80% of shoppers plan to spend less overall, a recent survey from the National Retail Federation found. The average shopper plans to spend about $737 on holiday items, 2% less than the average last year, it found. Overall, the trade group expects sales to rise marginally, by 3.9%.

Retailers face several challenges this season, including slumping consumer confidence; a low employment participation rate; and the shortest holiday calendar since 2002, with one less weekend.

Citigroup predicts consumers will remain C.H.E.A.P., or more interested in spending on cars, housing, e-commerce appliances and home-improvement projects than on apparel, electronics or home goods.

"We are predicting more holiday creep this year as retailers aggressively compete for a piece of a shrinking holiday sales pie," Citigroup analysts said in a report.

About 32% of retailers surveyed by the NRF intend to offer discounts earlier than last year because of the economy. Nearly half of marketers surveyed by Experian said they had launched campaigns before Halloween.

Experts caution retailers embracing this early-bird sales approach.

"I think the big risk is if you dilute the season and it becomes a protracted season where people come in early and late, and there's this huge gap in the middle," said Wendy Liebmann, CEO of WSL Strategic Retail.

If this sales valley gets deeper, Martin at ShopperTrak said, retailers will be overstaffed, which could cut into margins.

'Amateur hour?'

Why are people going along with Black Friday promotions bleeding into Thanksgiving?

"From our touch with consumers, we hear nothing but disdain about losing the holiday and from employees who complain about it," Martin said. "Consumers openly complain about it, but more and more consumers participate in it."

More than 35 million people turned up at stores on Thanksgiving last year, up 22% from 2011 and 58% from 2010.

Participants include customers like Jonathan Krackehl of Fairfield County, Conn., who moved his Thanksgiving dinner a bit earlier to accommodate the new sales schedule but still says he hates the change.

"I've gotten less enthused about it because of the hours coming earlier," he said. The shift has caused the crowd to change from experienced discount-seekers to "almost amateur" hour, he added.

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