TOPICS > Economy

How ‘Black Friday’ Morphed Into ‘Gray Thursday’

November 22, 2012 at 12:00 AM EDT
Many Americans will head to the mall after Thanksgiving dinner to snag retail deals once reserved for the early morning of "Black Friday." But as retailers fear a sluggish consumer spending holiday season, more are opening on the actual holiday. Hari Sreenivasan talks to Barney Jopson of The Financial Times.
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TRANSCRIPT

HARI SREENIVASAN: Now: the emergence of a new Thanksgiving Day tradition once reserved for the day after, shopping. Retailers used to wait until the wee hours of Black Friday to open their doors. But big box stores and national chains are increasingly opening their doors on Thanksgiving.

Tonight, Wal-Mart will open its doors to customers at 8:00 p.m. That has sparked protests and online petitions. But the retailing giant is not alone. Target, Toys ‘R’ Us, Sears and The Gap, among others, are all following suit and opening tonight.

For more on these moves and the bigger picture, we turn to Barney Jopson. He’s the U.S. retail correspondent for The Financial Times. His e-book “The Amazon Economy” is out next week.

Thanks for being with us.

BARNEY JOPSON, The Financial Times: Good to be here.

HARI SREENIVASAN: All right, so help us understand, why are these retailers doing this? Why is it so important?

BARNEY JOPSON: Well, this holiday season, we’re going to see consumers who are still pretty cautious. And as a result of that, retailers are just a little bit desperate.

Now, these early openings are all about trying to grab the attention of consumers as soon as they can and grab a few of those dollars, because, overall, this holiday season, it may be that the shopping pie doesn’t grow that much. So these retailers want to grab their own slice as soon as they possibly can.

HARI SREENIVASAN: So, Wal-Mart was one of the big stores to do so. I mean, they were already opening at midnight. Why push it into Thanksgiving Day itself?

BARNEY JOPSON: The competition among the retailers. And I think they’re inspiring each other to move it earlier and earlier, because, if people are going to be queuing up, then perhaps they want to be outside the store that’s going to open first.

So this creep phenomena is has set in, I think, as retailers are trying to outdo each other.

HARI SREENIVASAN: And what is the creep phenomena likely to stop at? Can we get earlier and earlier, all the way to Labor Day or possibly even the Fourth of July to start our Thanksgiving shopping?

BARNEY JOPSON: I think the answer to that is going to depend on the backlash that we have seen against some of these moves.

There have been labor organizations that have complained that, by opening early, these retailers are ruining the Thanksgiving of some of their employees. And I think some consumers themselves have some sympathy with that idea. It’s worth remembering that according to some surveys, only about 13 percent of shoppers are going to be out before midnight on Thanksgiving.

So there are a lot of others who will be at home relaxing on the sofa digesting their turkey. And they may feel that it’s only fair to let retail employees do the same.

HARI SREENIVASAN: Right. So, I know that there are some protests scheduled for tomorrow. What are they hoping to accomplish, if it’s such a small crowd or, I should say, a small section of the retail audience that they’re going to reach?

BARNEY JOPSON: I think they’re just trying to draw attention to the impact of the early openings on some of the employees, and perhaps draw attention to other issues that they have with labor and pay at some of these retail organizations.

HARI SREENIVASAN: Now, it should be said that some of this online frenzy sort of began not just today or tomorrow morning, but really early on in this week. It’s kind of making Cyber Monday obsolete.

BARNEY JOPSON: Well, absolutely. And one of the great movers here is Amazon. Amazon is a very powerful online player. It’s known as the great disrupter.

It’s a company that disrupts and upturns most of the industries it works in. And that’s the subject of the book we have done. And we have seen it this week. While some people are complaining about Wal-Mart opening a few hours early, Amazon has started its own Black Friday deals on Monday. So it started days ahead of everyone else. And that is something that’s going to disrupt the dynamic of the week.

A lot of shoppers are increasingly preferring to buy online. It’s more convenient. It’s easier. Amazon has started its own deals on Monday, so one crucial thing to watch this year is how much it is taking market share away from some of these traditional players.

HARI SREENIVASAN: So, what are those traditional players doing to push back? What are the big box retailers doing, besides just moving the start date up to tonight?

BARNEY JOPSON: One of the things they’re doing is trying to match Amazon’s prices. For the first time this year, Best Buy and Target have said that, on certain products, they will match the lowest prices Amazon can offer.

And that’s an attempt to combat a phenomena called showrooming. This is what happens when people walk into a bricks and mortar store, they find a product they like, they see the price, but then they pull out their smartphone, find it more cheaply online, and buy it online right there and then. That is something that drives these bricks and mortar stores crazy.

So Best Buy and Target are saying, this year, we are going to match those prices. But that’s a risky decision. It’s a bit of a gamble. It could end up reducing their own profits. So we will have to see just how eager consumers are to play these retailers off against each other.

HARI SREENIVASAN: So, let’s put that profit into perspective. Part of the reason it is called Black Friday is this is supposed to be when retailers make the turn. How crucial is this portion of the year for them?

BARNEY JOPSON: Well, by some estimates, the sales that they make on the Black Friday weekend can be about 15 percent or 20 percent of all their sales in November, and November and December combined can be up to a quarter, maybe even more, of the entire sales for the whole year.

So this is why it’s so crucial. This is why, as I say, some retailers are just a little bit desperate and why I think competition this year is going to be more intense than ever.

HARI SREENIVASAN: Retailers can be a pretty good barometer of consumer spending. And all of the stores that you have spoken to and in your reporting, are they expecting a big year?

BARNEY JOPSON: I think expectations are slightly more measured than they were last year. Last year was a big year. Sales grew by almost 6 percent from the previous year.

This year, people are expecting to see growth, but not quite at that level. And that’s interesting, because the housing market, the stock market, the labor market are all looking slightly better than they did a few months ago.

But all this talk about the fiscal cliff, the automatic tax rises and spending cuts are unnerving people a little bit.

And, also, we don’t know just how much people have been digging into their savings earlier in the year. So, I think, in spite of some positive economic news, people are still going to be cautious, and that’s going to mean a little bit of growth, but not a huge amount.

HARI SREENIVASAN: All right, Barney Jopson of The Financial Times, thanks for your time.

BARNEY JOPSON: Thank you.