Black Friday May Turn Red

ANALYSTS PREDICT SECOND-WORST SHOPPING SEASON IN 40 YEARS

By Lana Flowers

Posted: November 1, 2009 at 1:58 a.m.

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SPRINGDALE — People set alarms for 4 a.m. or camp out all night to be first in line for holiday specials.

It’s Black Friday, the day after Thanksgiving. The moniker derives from the fact it’s the day retailers turn a profit for the year, as shoppers flock to purchase Christmas gifts.

But the day may get a different name this year, Red Friday, as stores may not yet turn a profit. Consumers will hold on to their money and stores either will sell less or mark down more items, according to retail surveys and analysts.

This year may be better than last year’s holiday spending, but only because the holiday season of 2008 was the worst spending season in about 40 years, said Frank Badillo, senior economist and vice president of Retail Forward. The Columbus, Ohio-based firm analyzes retail sales and marketing data and surveys shoppers each month to predict and track consumer behavior.

Badillo predicts a 1 percent improvement in holiday sales this year compared with last year. Consumer confidence is slowly improving amid slowing job losses, rising home sales and increased housing starts, Badillo said. It still will be the second-worst holiday in the past 40-plus years, he noted.

The National Retail Federation predicts holiday sales will decline about 1 percent this year compared to last year, to about $437.6 billion. The 10-year average holiday season sales growth is 3.39 percent, according to a news release from the retail federation.

Stores started announcing holiday specials early, not waiting for Black Friday to tempt shoppers.

Wal-Mart Stores Inc. and Minneapolis-based Target Corp. kicked off the holiday toy war with specials announcements in late September. Target on one day announced it would have toys, like Transformers action figures, for $11.99.

Wal-Mart the following day announced it would sell 100 toys for $10 or less, including Transformers figures. Wal-Mart customer research indicated 55 percent of shoppers started budgeting for Christmas toy shopping by August.

“We expect consumers to shop earlier this year versus last year due to more aggressive marketing, pent up demand and better fashion in women’s apparel versus a year ago,” Deborah Weinswig of Citi Investment Research wrote in an October research note.

About 21 percent of consumers polled planned to shop earlier this year for holiday gifts. The online survey included 1,051 people 18 and older and was conducted Oct. 6 through Oct. 8, Weinswig’s research note stated.

Pinnacle Hills Promenade, the 1 million square foot outdoor mall in western Rogers, announced its holiday promotions in mid-October. They include $10 General Growth Properties Inc. gift card giveaways on Nov. 14 to members of a shopping club.

Besides malls running promotions, mass retailers and dollar stores will benefit from holiday spending, Badillo said, as shoppers look for deals and are willing to trade down.

Christmas gift shoppers will bargain hunt and expect discounts of at least 20 percent to 40 percent, Weinswig’s note stated.

Shoppers plan to give practical, small ticket gifts, like personal care and beauty items, said Mandy Putnam, manager of the Retail Forward ShopperScape program, which surveys at least 4,000 consumers every month.

Children may be more likely to get new clothes and shoes than pricey iPods or game consoles for Christmas. Competition in hot areas like consumer electronics and apparel may mean more promotions and price markdowns, according to the retail federation.

Other stores and online retailers will have to do “a lot of promotions” to compete with Amazon.com’s online business and Wal-Mart’s “beefed up electronics offerings,” Badillo said.

Other stores that cut inventory may lose sales, Weinswig stated in her note. Retail inventory is 6 percent less than what it was last year during the holiday season, the second steepest year-to-year decline since 1968.

News, Pages 19 on 11/01/2009

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