As consumers abandoned Thanksgiving dinners to head out in search of holiday bargains at stores that opened earlier this year than ever for Black Friday sales, one thing was fairly sure: they were shoppers with budgets in mind rather than those looking for luxury gifts.
While more people than ever were expected to shop on Black Friday (and the open-for-business hours of stores like Walmart and Target on Thanksgiving itself), the wave of purchases was not seen as a cause for celebration by merchants, many of whom rely on Black Friday and the rest of the holiday shopping season to change the color of their bottom lines.
Reuters reported retailers worried that anxious consumers would dial back on their shopping, driving harder bargains and forgoing goods that are not marked down enough to suit their budgets. Consumers themselves have said as much, with tighter purse strings and the need to cut back.
According to a survey by the National Retail Federation, up to 152 million shoppers are expected to hit the aisles over Black Friday weekend. That is a higher percentage than those who planned to do so in 2010—up as much as 33%. While most would rely on standard methods to cadge the best deals—50.5% said they would use holiday circulars, while 31.7% will actually sit through commercials—social media is having a greater influence this year than ever before, as might be expected when the top shopping prizes of the year are expected to be electronics (with iPods, iPads and tablet computers among the top 10—says PriceGrabber, with its Holiday Dashboard Report that outlines top searched Black Friday products).
Customers will monitor emails and alerts, looking for online coupons and sales, and merchants plan to oblige, with 84.2% sending emails (up from 80% last year) and 73.3% relying on Facebook to win customers (up from 51.7%). They will also use Twitter (57.9%) and their home pages (50%).
However, amid all the holiday hustle and bustle the news is not all good. According to a New York Times report, those who lined up in the wee hours or forsook the Thanksgiving dessert in favor of bargains are those with a real need to pinch pennies. In fact, high-end retailers like Saks Fifth Avenue, Nieman Marcus and Nordstrom aren’t even planning much in the way of sales.
According to Stephen I. Sadove, chairman and chief executive of Saks, business is so good there’s little need to woo customers. “We’re now into a less promotional environment than we were before the recession,” he said in the report, which pointed out that in Q3 the store was able to reduce the length of an annual sale to three days from four, and also excluded the high-margin category of cosmetics from another regular sale.
Retail analysts expect sales to rise about 3% over last year, with all income levels buying, but they also said that the gulf between higher and lower incomes will be more conspicuous in their shopping patterns.
Craig Johnson, president of Customer Growth Partners, a retail consultant firm, was quoted saying, “Those in a more modest income situation are the people who are going to the Walmarts and the Best Buys and the Targets at 8, 9, 10, 11 p.m. with little kids in tow because they can’t afford a baby sitter,” and added, “The women who are shopping the fourth floor at Saks are not Black Friday shoppers.”
Andrew Schiff, director of communications with Euro Pacific Capital, also sees no need to cheer an increase in retail sales. While he points out that many regard Black Friday sales as a “barometer on the health of the American economy,” he says, “It shouldn't be.”
Despite the fact that off-the-charts sales are seen as signs of a recovering economy, says Schiff, the opposite is true. “Most economists,” he says, “agree that the more Americans spend, the sooner the economy will recover. Unfortunately, most economists have a very poor understanding of what makes economies actually grow. Living beyond one's means, and running up debt to finance consumer spending is a sure pathway to economic ruin.”
He adds, “In truth, the keys to economic growth lie in the ability of a society to under-consume at times and to direct the savings towards productive investments. As a society, we are not doing that. A consumer orgy the day after Thanksgiving … simply means that we have taken on more debt to buy products that were more than likely manufactured overseas. This is nothing to celebrate.”