Bangs and Fizzles as Season Opens
By George Anderson
Retailers got off to an uneven start to the holiday selling season last week as some malls, stores and Web sites reported heavy traffic and free spending shoppers while others, well, didn’t.
According to the National Retail Federation (NRF), 133 million shoppers turned out on Black Friday and over the weekend with the average consumer spending $265.15 on gifts for others and themselves. For the weekend, NRF says consumers spent $228 billion or roughly 10 percent of what will be spent this year for the holidays.
Michael Niemira, chief economist at International Council of Shopping Centers, told the Associated Press, “Friday overall was strong, but Saturday was weak and disappointing, so together it was only a modest two-day performance. Still, I continue to believe that this is not a bellwether for how the season will end up.”
NRF’s president and chief executive, Tracy Mullin, echoed Mr. Niemira’s thoughts in a released statement, “Retailers know that the holiday season is not a sprint, it’s a marathon. Black Friday weekend is just the beginning of a month-long race to the finish line.”
Perhaps the biggest surprise over the weekend was Wal-Mart’s announcement that it was cutting its sales growth estimate for November from two to four percent to 0.7 percent.
The world’s largest retailer, say industry watchers, has chosen to hold the line on discounting this year.
C. Britt Beemer, chairman of America’s Research Group said, “Wal-Mart was a big loser because they didn’t get the same numbers of early bird shoppers as they did a year ago. The retailers that won this weekend were the ones that were super aggressive in special purchases and special pricing.”
Richard Hastings, Bernard Sands’ retail analyst, doesn’t see Wal-Mart’s slower sales as necessarily being a bad thing. In a released statement, he said, “Wal-Mart is getting serious about profits, and they’re not as obsessed about market share which means they are getting careful about sales promotions and inventories — things that impact expenses and cash flow. If they know what the customer wants, they are not going to worry about market share warfare on plasma TV’s, high end archery gear, or a dizzying array of pet food from every vendor imaginable.”
The retailers getting the biggest boost in traffic last week were able to do so without consumers ever leaving their home. According to comScore Networks, online sales on Black Friday were up 41 percent compared to last year. Thanksgiving Day sales were nearly double that of 2003.
Moderator’s Comment: What, if any, lessons can retailers learn from the start of this year’s holiday shopping season? Were you surprised by Wal-Mart’s
downward revision of its sales numbers?
We have to admit being caught off guard by Wal-Mart’s announcement. We knew the chain wanted to be less aggressive this year with loss leaders but still
figured the juggernaut would keep rolling along.
That said, we’re not at all concerned for Lee Scott and company. A strong start over the Black Friday weekend can create a sense of momentum for a retailer
but as we’ve learned from past seasons, it’s more important how you finish than how you start. The last two weeks before Christmas are key. –
George Anderson – Moderator