Retailers Look for Early Start, Better Margins

Nov 24, 2004
George Anderson

By George Anderson

Here we are again, just a couple of days from the retailing tradition known as Black Friday. This year, as with those that preceded it, brings a host of new promotions and incentives for consumers to start their shopping before the sun comes up.

Staples is offering a special four-hour sale between 6 a.m. and 10 a.m. Sears is giving out a $10 gift certificate to the first 200 customers at each of its stores on Friday. Target has been running commercials to get shoppers to sign up to get a wake-up call from celebrities such as Heidi Klum and Ice T.

Even with these promotions, many believe that retailers are looking to tone down the promotional activity and discounting of recent years.

Wal-Mart, according to the Bloomberg news service, has said it would be more “balanced” in its promotional activity this holiday. Last year, the company offered a number of loss leaders on some hot-selling toys as well as DVD players selling for $29.87 to drive store traffic. The retailer’s traffic was up but some, such as Smith Barney’s Deborah Weinswig, say Wal-Mart was not able to make up the margin loss with other purchases from these customers.

“Retailers over time have taken potentially one of the best selling days of the year and turned it into a financial disaster,’ said Robert Gordman, managing director of strategic planning at Meridian Inc. “Retailers are starting to take a somewhat more rational approach to the day instead of giving away the store.’

Moderator’s Comment: Do you expect retailers to do less discounting this holiday season than in recent years? Are there draws other than price that will
get consumers to choose one store over another this year?

Keri Spanbauer, an analyst at Thrivent Investment Management, is looking for a better profit story this year. “Inventories are better controlled. I don’t
think extremely low prices will be necessary this year to draw shoppers,” she said.

George Anderson – Moderator

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