Wal-Mart Redeems Itself in This Year’s Post-Thanksgiving Derby

Discussion
Nov 28, 2005
Rick Moss

By Rick Moss


“Lukewarm” was an oft-used adjective in news pieces early this weekend describing the official start of the holiday season. Mostly, those reviews were based on a report from ShopperTrak RCT Corp. which, having tracked sales at over 45,000 retail outlets, said that Black Friday numbers were largely unchanged from a year ago. The implication was one of disappointment for retailers that had engaged in especially early mark-downs and extended hours in efforts to distract consumers from thoughts of higher energy costs. (In the shoving match to be the first to open on Friday morning, Kmart even decided to begin the holiday push on Thanksgiving day.)


However, as reports filtered in from individual retailers, it seemed that the specialty mall-based stores and other non-discounters were the ones dragging the numbers down. Gap was quoted as saying store traffic “deteriorated beyond anticipated levels,” and is now predicting a weak holiday season.


Not the case outside the mall. Wal-Mart, having taken heat last year for a poor post-Thanksgiving performance, said it experienced better-than-expected sales on Friday. Obviously determined to reverse last year’s mistakes, Wal-Mart’s aggressive early season discounting, launched with a holiday ad campaign begun on November 1, may garner a 4.3 percent gain in this month’s same-store sales, according to the company.


Wal-Mart said demand overshot expectations at its namesake stores and Sam’s Club outlets, with computers and dolls among the fastest selling items.


Also reporting bigger crowds this season was Sears, and Target said performance looked about on par with last year’s strong holiday results. J.C. Penney released an optimistic assessment of the days following Thanksgiving and for the remaining holiday period, saying shoppers were snapping up apparel, accessories and home gift items at an encouraging rate.


These upbeat views from discounters were supported yesterday by a National Retail Federation’s news release (“Blockbuster Black Friday Weekend”). In celebratory tones, NRF announced “an incredible 21.9 percent increase over last year’s $22.8 billion” for Friday sales. In the survey conducted by BIGresearch, 145 million shoppers hit stores and web sites, spending $302.81 each, on average.


Another contradictory indicator to the ShopperTrak data was Visa’s report that Black Friday spending on credit and debit cards jumped 14 percent over last year, reaching $3.9 billion. In a released statement, Wayne Best, economist with Visa USA, said, “The strong spending volume Visa is experiencing, and the trends we’ve seen leading up to Thanksgiving, bode well for merchants this holiday season.”


Most reports, however, asked analysts and industry groups to comment on the ShopperTrak data, which showed that Black Friday sales had slipped 0.9 percent from a year ago to $8 billion, and most experts were quick to downplay report’s significance.


“While Black Friday is important to retailers, it’s not always the best indicator for consumer shopping patterns during the remainder of the holiday season, which should allow the retail industry to continue feeling optimistic,” said Michael Niemira, chief economist and director of research for the International Council of Shopping Centers.


Meanwhile, NRF President and CEO Tracy Mullin, warned against over-confidence. “Even though many retailers saw strong sales this past weekend, companies will not be basking in their success. Stores are already warming up for the next four weeks because the holiday season is far from over,” she said.


Moderator’s Comment: From reports you’ve seen and your own observations, what is your Monday morning quarterback assessment of this year’s post-Thanksgiving
performance?


There’s now no doubt that Wal-Mart was seriously embarrassed by last year’s poor reviews from the media and analysts, and went back on the “discounting
steroids,” disregarding any potential long-term detrimental affects. At least symbolically, they’ve regained King of the Hill status as the most aggressive holiday discounter
around (at least the press, in its tendency to paint everything in distinct black and white tones, has made that out to be the case).


Although data from ShopperTrak and others bring indications to the contrary, the TV footage and newspaper coverage of deal-crazed barbarians lined up at
the retail gates on Thursday morning, it seems, could only be good for retailers. As with the “there’s no such thing as bad publicity” rule, any excitement to get shoppers’ attention
has got to be a good thing. There’s nothing worse than a boring Black Friday.

Rick Moss – Moderator

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17 Comments on "Wal-Mart Redeems Itself in This Year’s Post-Thanksgiving Derby"


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Mark Hunter
Guest
Mark Hunter
15 years 3 months ago

5 AM has now become the new official start to “Black Friday,” Yes Wal-Mart deserves credit with the move, however, does this mean Target and everyone else goes with a 5 AM opening next year? If this is the case all we’ve done is continue the trend of opening earlier thus increasing labor costs still more. Bigger yet is the eventual turn-off the trend can have on the consumer and as a result encourage them to the internet for their shopping.

David Livingston
Guest
15 years 3 months ago

All that stuff Wal-Mart advertised to be available from 5 am to 11 am on Friday was still sitting there on Sunday at the same low price. I went to Wal-Mart at 5 am and only about 100 people showed up. Everybody had personal DVD players as the lead item. Maybe next year, retailers will have Black Friday a week earlier. In a way, it’s like they already did.

Ben Ball
Guest
15 years 3 months ago

There’s a very informative article excerpt on the AdAge website right now. The gist is that consumers’ holiday shopping patterns haven’t changed substantially since 1970 at least (the base period of the study cited). Consumers shell out about 19.8% of total annual expenditures in the holiday period. It shifts around a bit within channel, retailer and day(s) in the period, but it is essentially constant. All that happened this year is that Wal-Mart got more share earlier.

Edward Herrera
Guest
Edward Herrera
15 years 3 months ago

In my opinion, Black Friday rivals Superbowl in many households as the event of the year. Some Superbowl games are good and some are not but people still watch. I am amazed at the way shoppers brag about their deal of the day and how they attained it… pushing, shoving, wrestling, spitting, yelling, and holding your spot in line.

It is not about the product, it’s about the hunt. People will talk about how they will never do that again until they just can’t resist. Retailers feed the frenzy. See you next year.

Giacinta Shidler
Guest
Giacinta Shidler
15 years 3 months ago

In rural Illinois, the crowds were definitely out in force at 6:00 am on Friday. All the stores were packed, but Sears was a glaring exception. More than anything, it reminded me of a ghost town.

As far as execution goes, my experience showed an illuminating contrast. I hit Staples for some of their deep-discount items. The store was packed and simply not set up to handle that level of traffic. Traffic flow through the store was terrible; they only have a few registers; it wasn’t clear where the lines for the registers started and I waited in line for 40 minutes to purchase my items. Next stop, Target. The crowd seemed just as dense, the parking lot was full to capacity, yet I spent maybe 5 minutes standing in line there. There were staff on the front lines directing customers to different registers. Target’s execution was terrific.

I didn’t dare try Wal-Mart that day. I’m not a masochist!

Don Delzell
Guest
Don Delzell
15 years 3 months ago
As a data point of one, here was my Southern California experience: Off-mall mass merchants and big box specialists saturated the media with Black Friday advertising. I saw very little for mall-based retailers. Visually, traffic looked extremely strong in Target, Wal-Mart, Kmart, Best Buy and Circuit City. Two Radio Shack locations were also very heavily shopped. All of the above had key categories represented in “loss leader” advertising. Target’s toy, small appliance and electronics areas were very heavily shopped, and Wal-Mart’s earlier opening was an incredible success at the one location I visited. All of these retailers had strong inventory in advertised items, and close to enough store personnel to handle the traffic. The marketing was carefully chosen to drive traffic, and it did. It drove traffic for specific items. Visually, there appeared to be a market basket effect, but I have no data to corroborate this observation. My hunch is that mall-based retailers will see a slight shift in business away from Thanksgiving and toward the next four weeks. The nature of their sales… Read more »
Kai Clarke
Guest
15 years 3 months ago

The debate continues, but I agree with the folks at Visa. Sales are up, gas prices are not a factor, and this will be a good shopping season. Even my first-hand anecdotal evidence supports this as I ventured out on Friday and again on Sunday. The bargains were great and retailers were certainly attracting non-bargain sales as well. Holiday shopping mentality is driven in unique ways, which reflect more of what people “want” rather than their needs. During these times of “want” shopping, it is the early bird who gets the worm, and Wal-Mart and others have learned this from their prior year experiences. Expect more of the same spending as the holiday season continues. It is hard to argue with a 14% rise in Visa card usage!

Rick Moss
Guest
15 years 3 months ago

Scanner…I think the level of violence at urban stores was about on par with what you experienced, but it’s likely the population has long-ago learned to take it in stride. As David Letterman said on Friday (I’m paraphrasing), “I went to Macy’s today. It was mobbed. I was pushed; I was shoved; I was groped. Heck…I’m going back tomorrow!”

Joseph Peter
Guest
Joseph Peter
15 years 3 months ago

Santa waved goodbye to Marshall Field’s in a parade on State Street (observed in Friday’s Chicago Tribune front page picture) to kick off the last Chicago holiday season at Marshall Field’s! It was pretty funny to see that even Santa had to shed a few tears about Chicago’s retail institution shattered.

Field’s sales on Friday were unreal….so unreal that the State Street store was jammed to capacity….a great Black Friday for the last Christmas at Field’s.

Macy’s is really drumming up Christmas shopping advertising here by running commercials that say, “There’s no place like Field’s, There’s no place like Field’s.”

Then may I ask why the heck are the changing the name if there is no place like Field’s????

It’s going to be an exciting Christmas shopping season here in Chicago!

George Whalin
Guest
George Whalin
15 years 3 months ago
I was in stores at 5:00 am on “Black Friday” and saw huge crowds at both off-mall and mall-based stores. While Wal-Mart, Best Buy and Target drew customers into their stores with aggressive price promotions, mall-based stores such as Macy’s, Sears, and JC Penney also brought large numbers of consumers into their stores early on Friday. All this proves is that when the prices are low enough on merchandise consumers want, they will turn out in large numbers. Does this mean Holiday 2005 will bring record sales to retailers? Not necessarily. The holiday selling season is longer and more fragmented than ever. Today, some consumers begin their holiday shopping in stores, online and from catalogs as early as September. Others begin on “Black Friday.” A growing group of consumers wait until the last few days before Christmas to do their shopping. And the two-weeks after Christmas has become a crucial part of the holiday selling season. Add gift cards to the mix, and one can quickly see that predicting retail success for the season cannot… Read more »
Jeff Schaengold
Guest
Jeff Schaengold
15 years 3 months ago
Good numbers, bad numbers… it didn’t appear to be a Red Friday from our view. W-M – Customers lined up as early as 3 AM for the $397 laptop. Wal-Mart issued vouchers to those waiting outside for laptops and electronic games. Each store had approx 15 laptops. By the time customers appeared at the store for the official mad dash, there was no front page merchandise at store opening. Union City, CA Wal-Mart had police and a riot squad in the parking lot. Not because of 5 AM Black Friday, but because customers that believed the advertisement came at 5 AM and there was no front page merchandise to purchase. TV’s – 23″ Symphonics were advertised at $99.97. On the floor, they were $88 and very few left in the store in the AM. Come on. 23″ TV’s for $88 and they didn’t sell out. W-M advertised a price match policy. The price match only applied to stock on hand. At 5 AM, anything the consumer wanted for a price match was gone through vouchers.… Read more »
Mark Burr
Guest
15 years 3 months ago
Having this day off was an unusual occurrence for me. It may have been the second or third time in a career. It was interesting to see it from a consumer perspective first hand. It began with a date to my favorite retailer that didn’t have a single customer for sales and only a few for service. However, being out that early, I witnessed the crowds and the accidents caused by scurrying about with their minds on Wal-Mart rather than the road. I passed multiple accidents in the intersections headed for the malls. I couldn’t help thinking to myself at the time – when did this become so ridiculous? In this year’s events, it seems to me that the only thing ‘Black’ would be the retailers’ performance through it all. In my area alone, shoppers were beaten, trampled, pushed and shoved. And, that’s not the reputation of the town! Yet, it happened here! I imagined what it must have been like in the more metropolitan areas across the country. Somehow, I felt ashamed for my… Read more »
Santiago Vega
Guest
Santiago Vega
15 years 3 months ago

Overall, I believe discount and department stores faired better than specialty retailers (with the exception of those that are irresistible to their target niche such as ANF, AEOS…). I am concerned, however, about the promotional frenzy that needed to be generated in order to get customers to buy merchandise, so margins are going to be disappointing. Will volume make up for it? We’ll see.

Luxury retailers and etailers will be the winners again this holiday season. They don’t need to be as promotional as the other guys. Customers are still hungry for their products and will pay a premium for a luxury brand’s cachet.

Tom Bales
Guest
Tom Bales
15 years 3 months ago
Day end figures for Sears Holding Company showed double-digit sales declines versus last year for both Friday and Saturday in spite of reports of increased footprints, so it’s obvious that not everyone is sharing in Wal-Mart’s season kickoff successes. While the strategies may have paid off for Wal-Mart, those such as Sears, who are unwilling to go the extra mile in discounts and merchandise availability, actually lost ground. It may be that we’re seeing how continuing to cut costs and reduce customer service levels, while not engaging in the deep discounts that have come to mark the holiday season even more than decorated trees and Santa Clause images, will eventually come back to bite those companies unable or unwilling to play the games. What happened to Sears this past weekend and what happens during the rest of the holiday shopping season should be good indicators for what’s happening on a smaller scale throughout the year. Wal-Mart simply has the clout to do whatever is needed to bring the customers into their stores and they can… Read more »
Richard J. George, Ph.D.
Guest
15 years 3 months ago

Black Friday was Green Friday for customers. It was impossible to pay full retail price for anything that day. The national news snippets showed customers jostling for a limited number of “unbelievably” priced electronic items. The real challenge will come in the next two weeks when customers in the northern part of the country receive their first home heating bills. If American customers can bounce back from these bills as they did from $3.00/gallon of gasoline then the season will be as positive as predicted. Otherwise retailers will simply have traded margin for sales.

Mark Lilien
Guest
15 years 2 months ago
When the internet was young, hundreds of on-line retailers gave their merchandise away, losing money on every sale. Internet sales increases were phenomenal. Anyone can give merchandise away and look busy, particularly if they use saturation advertising. Here’s the standard list of rationalizations: we have to do it because everyone else is doing it; we’ll make our store top of mind for the Christmas season; we’ll make it up by stimulating traffic; they’ll buy full-margin stuff while they’re in the store; they expect it; we won’t lose much money because we’ll limit the supply; we’ll get the vendors to help subsidize it; and we have to please Wall Street. When your gross margin is 35% and your taxable earnings are 3%, and the ad spending is 3%, you can’t survive giving things away. You aren’t enhancing your brand, and you certainly aren’t making the case for everyday low prices. It’s like getting drunk. You feel great for 2 hours, then your hangover drives you nuts for 8 hours. And the most tempting way to make… Read more »
tim malone
Guest
tim malone
15 years 2 months ago
Where are the Fire Marshals on Black Friday? Black Friday is now the notorious day that turns usually reasonable individuals into aggressive, failure is not an option, customers from hell. There were so many shoppers in the Best Buy store I was in at 5 am that you could not walk up any aisle without squeezing past other shoppers. These stores are over-packed with customers, not just shoppers. Stores that exceed capacity limits set by local fire departments are one thing. But when these shoppers have exhausted the supply of shopping carts and hand baskets it becomes a different situation. People that get up in the middle of night to be at stores when they open at 5 am are there to buy. These customers fill shopping carts and hand baskets with merchandise which makes maneuvering about a store even more arduous. I keep thinking about the video showing people stampeding into a Wal-Mart and stepping over the poor shoppers that had tripped in front of them. Imagine what would happen if a fire or… Read more »
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