Retailers are working hard to get shoppers to spend their money early this holiday season, with early November deals and Black Friday hours that start on Thanksgiving.
Whether consumers will also spend more is an open question.
Many analysts have been scaling back their projections for holiday spending, particularly after disappointing financial reports this week from Kohl’s and Wal-Mart. Marketing firm Omnicom Annalect said Friday it expects in-store traffic to drop 1 percent, with overall sales growth below 3 percent.
Even if shoppers head out in droves to find November bargains, many observers think they’ll spend less later. The early openings largely aim to take business away from competitors, and prevent rivals from doing the same.
“Opening earlier does work,” said Mark Bergen, associate dean of marketing at the University of Minnesota’s Carlson School. “If I get you into my store first or second, I may get 20 or 30 percent of a consumer’s dollars instead of 10 percent.”
The holiday push has already been underway for several weeks, with television ads and doorbuster-worthy deals kicking in as early as Nov. 1. Things will intensify on Thanksgiving Day, when Best Buy and Wal-Mart open the doors at 6 p.m. and Target, Macy’s and Kohl’s follow two hours later.
“It’s a herd instinct,” said Dave Brennan, co-director of the University of St. Thomas’ Institute for Retailing Excellence. “Everyone feels they’ll lose out if they’re not part of it.”
Retailers open early for market share protection, Bergen said. Every shopper has a finite amount of cash to spend for holiday gifts, and the kitty grows smaller as it gets closer to Christmas.
Retailers believe that the early dollar is the best dollar, said Marshal Cohen, chief industry analyst with the NPD Group.
“If someone gets an e-mail promotion for a big-screen TV for $399 and buys it on the Tuesday before Thanksgiving, the other retailers have lost out,” Cohen said.
It’s especially important for retailers courting middle and low-income shoppers. “They have a limited budget, and whoever gets that budget first wins,” said Candace Corlett, president of WSL Strategic Retail in New York.
As much as 40 percent of retailers’ annual sales are rung up during the holiday season, about $580 billion last year. Retailers were hoping this year’s Black Friday weekend would bring bigger sales than last year, when retail sales actually fell 1.8 percent.
But recent reports from the National Retail Federation suggest that isn’t going to happen. Nearly 140 million shoppers are expected to shop in stores or online from Thanksgiving to Sunday, a decrease of about 7 million from last year.
Shoppers expect big discounts
At the same time, many of those will be looking for big discounts. Nearly a third of shoppers will be motivated only by discounts of 40 to 50 percent, according to a holiday shopping forecast by Inmar and America’s Research Group.
Amanda Gust Rutherford, 28, of Crystal said she’ll be shopping on Thanksgiving for bargains for her kids, age 11, 6 and 11 months.
“I only buy when it’s at least 40 percent off or I can get it cheaper used,” she said.
Wal-Mart appears to be the early leader for Thanksgiving Day/Black Friday weekend doorbusters, according to Dealnews.com. Some of its best deals include an Emerson 50-inch HDTV for $288 and Monster Beats by Dr. Dre Solo headphones for $115, but it’s also tackling Black Friday bugaboos head on.
Twenty-one deals are guaranteed to be in stock by Christmas for those who show up during the stated times. The stores are also handing out wristbands before their 6 p.m. and 8 p.m. Thanksgiving Day events, so customers will be able to shop the store instead of wasting time in line.
Target is talking about low prices more, focusing on Redcard discounts, mentioning dollar signs in their commercials, and reaching out to noncore customers making less than $50,000 per year per household. They’re layering Redcard and Cartwheel discounts and temporary price cuts, said Amy Koo, an analyst at the Kantar Retail consulting firm in Boston.
In an effort to be sensitive to shoppers who prefer to stay home on Thanksgiving, Target will offer almost all of its Black Friday doorbusters online in the early Thanksgiving hours, said Kathee Tesija, Minneapolis-based Target’s executive vice-president of merchandising and supply chain.
“They can choose exactly when and where they want to shop,” Tesija said.
Analysts say that consumers shouldn’t feel as if the discounts will be over after Cyber Monday. According to price studies done by Consumer Reports and Decide.com, prices generally fall to their lowest prices after Cyber Monday, with the exception of a few doorbusters, toys and jewelry.
But with 13 percent of consumers expected to shop on Thanksgiving, earlier Thanksgiving openings are inevitable and will change the holiday forever, said Corlett, from WSL Strategic Retail.
“We can beat our chest about the holiday being about a day of rest,” Corlett said. “But if you open the stores, people will come.”