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With Expectations Low, Retailers See Victory On Black Friday

Published on Nov 27 2017 11:20 AM in Retail tagged: Trending Posts / Walmart / Amazon / US Retail / Black Friday

With Expectations Low, Retailers See Victory On Black Friday

Bricks-and-mortar retailers did enough things right on Black Friday to consider the event a success, even if the crowds of past years haven’t returned.

Chains simplified promotions this year and took a keener eye to managing their inventories. At Walmart Stores, colour-coded maps helped shoppers navigate the aisles. Retailers also made headway with their e-commerce sites, aiming to chip away at Amazon’s dominance online. Taken together, the changes may help bolster sales and profit margins, despite a decline in customer traffic at many locations.

“People think retail is a nightmare, but it’s not,” said Tracy Ferschweiler, a Walmart market manager who oversees seven stores around New York and New Jersey.

The weather also provided assistance, with cooler temperatures in much of the US putting shoppers in the mood for coats and sweaters, but the day wasn’t without its glitches. Macy’s, the largest US department-store chain, struggled to process credit-card transactions. That led to long lines and frustrated customers.

Shopping Season

Many retailers are counting on the holidays to help fuel their turnaround plans, and Black Friday is the season’s traditional starting point. Still, the event has lost significance over the years, especially as chains spread out their promotions to attract shoppers earlier in November.

In the past, Black Friday was famous for crowds bursting through doors and fighting over $99 DVD players. There’s less urgency among shoppers now, but retailers have many advantages this year, including strong consumer confidence and low unemployment.

The day has become more about the experience of shopping, rather than the actual discounts, said David Bassuk, co-head of retail consulting at AlixPartners LLP.

“People want to start getting into the holiday spirit and enjoy the concept of shopping and the holidays,” Bassuk said.

At a Target Corp. store in Kingston, New York, 55-year-old Donna McCluskey said that she got up early to shop Black Friday deals as part of a family tradition.

“We do this every year – we came here for fun,” said McCluskey, who arrived at Target with her two adult sons. “We do a lot of shopping online, but it’s a different experience shopping in stores. You can feel and touch and look at the products.”

E-Commerce Growth

E-commerce continues to outpace bricks-and-mortar retail in sales growth, making it crucial for traditional stores to have enticing websites and apps.

Black Friday online spending was a record $5.03 billion, up 16.9% over last year, according to Adobe Systems. Much of that shopping is now occurring on phones, with mobile devices accounting for 54% of visits. Adobe said that it expects Cyber Monday to be the biggest online shopping day in history, with $6.6 billion in predicted sales – a 16.5% increase over 2016.

Such optimism helped push the fortune of Jeff Bezos, the founder of Amazon.com, to $100.3 billion, as the online retailer’s shares jumped more than 2% on Friday.

Physical store traffic, meanwhile, was down 4% to 6%, Cowen & Co. analyst Oliver Chen estimates.

Retailers have tried to avoid becoming showrooms for Amazon, meaning that customers look at products in their stores and then buy it from the e-commerce giant. To keep shoppers from straying, Walmart and others have pumped billions into their web operations.

Sights and Sounds

Macy’s overhauled its rewards programme, aiming to keep consumers loyal regardless of whether they’re online or off. A customer who shells out at least $500 a year gets free shipping and 25% off a day of shopping, but the 159-year-old chain is also touting its traditional retail experience as a way to hook shoppers.

“Customers today want to go to a store – the sights, the smells, the sounds,” chief executive officer Jeff Gennette said in an interview.

Some retailers have more of an uphill battle. Sears saw same-store sales fall by 17% at its flagship chain last quarter, and 13% at its Kmart brand.

At a Sears in upstate New York, a quiet store greeted 47-year-old Nadine Charles on Friday. She’s been a regular Sears customer for years, but feels like the selection has gone downhill.

“I don’t find anything good anymore at Sears,” said Charles, a nurse with four children. “They don’t have good brands. Now I can buy things in Walmart. They are cheaper and last longer.”

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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