Sales at retailers’ brick-and-mortar locations may suffer during the weekend after Thanksgiving, with analysts saying more shoppers are skipping malls and buying online.
About $1.73 billion was spent online on Thanksgiving Day, a 25 per cent increase from last year, according to Adobe Systems Inc. On Black Friday, about $822 million was spent by 11 a.m., 15 per cent more than in 2014, the company said.
Retail observers say many of those purchases are coming at the expense of trips to physical stores, costing merchants more in shipping and depriving them of the impulse sales they make to shoppers wandering their aisles. Smaller-than-expected crowds turned out at shopping centers in North Carolina, where Jeff Simpson, a director at Deloitte Consulting LLP’s retail practice, was monitoring the action on Black Friday.
“Across the board, much less traffic than was anticipated,” Simpson said, without giving specific figures. “Much, much slower.”
Traffic Forecast
About 135.8 million Americans are expected to shop in stores or online over the four-day weekend, according to the National Retail Federation, the largest U.S. retail trade organisation. While the forecast represents a 1.6 per cent increase from last year, the NRF’s projection has been overly optimistic in the past. Last year, it was 4.8 per cent higher than the actual turnout it found in its post-weekend shopping survey.
Simeon Siegel, an analyst at Nomura, saw decent crowds at the Westfield Garden State Plaza mall in Paramus, New Jersey, but still expected many of the shoppers to already have made purchases online.
“This day is going to be a disappointing day,” Siegel said. “If you have the right products you can win, but it’s a tougher environment.”
Online Shift
With the continued shift of spending online in mind, retailers like Wal-Mart Stores Inc. and Target Corp. are putting more of their deals on their websites or offering them over a longer period of time. Target has countered the increasing popularity of Amazon.com Inc. by providing free shipping and returns on holiday orders, while Wal-Mart plans to offer more than four times as many discounts as last year on the Monday following the Thanksgiving weekend.
But the weekend after Thanksgiving is still one of the busiest for U.S. retailers, who use the period to highlight their offerings. Target and Wal-Mart say they are expecting record turnouts.
“This is the big event,” said Cindy Hudson, Target’s senior vice president of store operations. “We have a large team dedicated all year to helping pull off Black Friday.”
Command Centre
As stores opened across the country starting Thanksgiving evening, a Target command centre at its Minneapolis headquarters was getting live video feeds from all of its 1,800 locations. There are also four regional command centres monitoring specific activity in their markets.
Inside the command centre, workers glued to computer monitors and screens on the wall can view the lines outside stores to make sure they are orderly, shoppers are happy and that customers are getting into the store at the right pace - not too fast, not too slow. Inside the stores, live feeds at checkout lines monitor for interruptions.
Target said Friday in a statement that it had a "strong turnout" in stores on Thanksgiving, without providing specific figures. Gaming consoles, televisions and movies were among the top-selling items. The company also said it sold an iPad every second throughout the day, on average.
Still, Deloitte’s Simpson sees less of a sense of urgency among consumers seeking deals. He scoped out pre-Black Friday opening crowds at three major retailers that he wouldn’t identify, and said the lines had six to eight people, far less than in previous years.
“It’s early," he said, "but it doesn’t look great."
News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.
