With the 2014 holiday sales season spread out longer, Black Friday is no longer the bellwether for holiday sales it once was, say veteran retail analysts.
Analysts offered a variety of numbers for the weekend, some showing sales increases, others showing decreases. The National Retail Federation reported that total projected sales were down 11 percent for the weekend, while spending over the entire holiday season will increase by 4.1 percent this year.
“We believe the drop in consumer spending was not a matter of consumers pulling back, but consumers responding to a much longer, heavily promoted and discounted holiday spending season that begins almost as soon as the Halloween costumes are returned to the attic,” said NRF SVP Bill Thorne. “Consumer spending for holiday gifts starts earlier and ends later as the post-recession consumer seeks the best deals at the price point they want to pay. Further, as mobile use continues to grow and on-line retailers become more competitive, the need to fight crowds in order to get the best deals becomes less important.”
The reported Black Friday sales decrease “isn’t an accurate representation of the entire universe of holiday sales, it’s only a slice of the pie,” said Greg Maloney, Americas retail CEO for third-party mall manager JLL. “Many retailers started their promotions as early as Wednesday, and we found across our portfolio of shopping centers that retailers who opened on Thanksgiving traded Black Friday morning sales for Thursday evening sales.” While Black Friday remains critical for retailers, it started losing its luster as the day for holiday shopping nearly a decade ago, Maloney says. “Spending is expanding beyond a single day or weekend, and I anticipate that retailers’ emphasis on maximizing holiday profits and promotions will spread out even further next year; we may see the season ramp up as early as November 1.”
On Monday former Apple CEO John Sculley told CNBC that focusing on sales from a single day or weekend is the wrong way to think about holiday retail today. “What you’ve got to think about is a selling season where 40 percent of sales of big retailers take place in the last two months of the year,” he said. “Trying to nail it on a particular day doesn’t make sense anymore.”
Black Friday traffic was a little softer for a few reasons, according to Kit Yarrow, author of Decoding the New Consumer Mind: How and Why We Shop and Buy. “Consumers don’t get stars in their eyes anymore,” she said. “The recession left them feeling they need to be in charge of their destiny, and technology has given them a massive tool chest to find rock-bottom prices.” With instant digital access to the best deals, many Thanksgiving weekend shoppers simply deferred their purchases until later, when prices are apt to drop even more, she says. “While the Black Friday discounts were good, consumers have seen better,” she said. “I don’t have any fears whatsoever that shoppers aren’t going to spend this season.”
Observing that sales reports “were all over the place this year,” retail consultant Jeff Green, who heads an eponymous firm in Phoenix, said “the rules have changed, and we better not jump to conclusions so quickly.” Though Black Friday traffic was down, the November retailer comp-sales reports coming out this week “are fairly strong, and that means many more dollars were spent earlier in the month than in previous years; everyone got started with door busters earlier this year.” Green says the numbers he considers credible show overall increases of between 2 percent and 5 percent year over year. His main concern is whether retailers, with their presumed thin margins, made any money.
ComScore says online sales were up by 32 percent on Thanksgiving Day and by 26 percent on Black Friday versus last year. On Friday Target reported that Thanksgiving was its best online shopping day ever, with digital sales up by 40 percent over 2013.
ShopperTrak’s survey reported a 0.5 percent drop for both Thanksgiving Day and Black Friday sales, while IBM said that Thanksgiving Day online sales were up by 14.3 percent and Black Friday sales by 9.5 percent, year on year. Kantar Retail’s own fourth-quarter projections, based on Commerce Department data, say overall retail sales will rise by 4.2 percent in the quarter.
Frank Badillo, vice president and chief economist at Kantar Retail, says his company has come to rely more on ShopperTrak, which measures actual in-store traffic, plus IBM and ComScore, which published sales reports for online sales, Badillo says.
The NRF stood up for its numbers on Monday, with Kathy Grannis, senior director of media relations, defending the organization’s methodology and noting that “we are not cheerleaders — we exist to paint a picture of the retail industry, even if it’s negative.”