Black Friday May Not Mean Much Green For Retailers
Friday, November 28, 2008JEFF YASTINE: Today is black Friday, the shopping day that is as much an American ritual as Thanksgiving. With the economy in a tailspin, many retailers opened their doors in the wee hours of the morning in an effort to entice shoppers. But as Erika Miller explains, retailers are bracing for a dismal holiday season.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: For retailers, there's more fear than cheer as the holiday shopping season kicks off. Macy's in Herald Square opened at 5:00 a.m.-- an hour earlier than past years -- enticing customers with deep discounts and coupons galore. Although pleased by today's turnout, Macy's CEO Terry Lundgren is under no illusion of how difficult it is to turn shoppers into spenders.
TERRY LUNDGREN, CHAIRMAN & CEO, MACY'S: This year is different. There's no question about it. This year is different because you have so many factors impacting the customer. Obviously, we knew early about the housing challenges that people were having, credit challenges that people were having. But you know, jobs is a really big issue now.
MILLER: The holidays wouldn't be the same without toys and that category is historically one of the most recession resistant in retail. But in a sign of the times, Toys-R-Us was offering far more door buster specials than last year. CEO Gerry Storch says that's just the beginning.
GERALD STORCH, CHAIRMAN & CEO, TOYS "R" US: We have planned a very aggressive schedule from now through Christmas. We have more promotions than ever, more events than ever. We have tremendous values throughout the store.
MILLER: Although crowds were out in full force at Macy's and other stores today, the predictions for the holiday season overall are downright bleak. The National Retail Federation is projecting a 2.2 percent gain in holiday sales this year. The International Council of Shopping Centers is betting the increase will be half that. Discounters are likely to be one of the few bright spots, according to retail analyst Adrianne Shapira.
ADRIANNE SHAPIRA, RETAIL ANALYST, GOLDMAN SACHS: I think the discounters are well positioned to win not only because of their defensive mix, their value orientation, but they are very relevant in consumer electronics -- a category that tends to have newness, innovation and excitement for the holiday season.
MILLER: A lot is riding on the results. Experts say holiday sales can account for as much as 40 percent of a merchant's annual revenues and up to 80 percent of profits. Despite all the hoopla around black Friday, it's not the top shopping day of the year. That's an honor that belongs to the Saturday before Christmas. But for Macy's and others, today is an important barometer of the consumer mindset.
LUNDGREN: We understand that consumers have got a limited budget that they are going to be working off of. And so our strategy is all about getting a bigger piece of that budget that's spent at Macy's. And so that's what we're focused on.
MILLER: If retailers don't have enough to worry about, the calendar is also working against them. Black Friday falls on the latest date possible. That means five fewer days between Thanksgiving and Christmas compared to last year. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
