Retail Slump Could be Boon to Buyers

by Janet Cho of The Plain Dealer

“With most retailers expecting a crummy Christmas, glad tidings may await cash-strapped consumers. In normal times, the day after Thanksgiving, when stores traditionally kick off the Christmas shopping season with door-buster sales, is seen as the time to snag some real bargains.”

“But this year, the wobbly economy and plummeting consumer confidence caused worried retailers to start slashing prices weeks before the day known as Black Friday. Retailers count on Black Friday to help them turn a profit for the year. Analysts use the day to gauge whether deal-conscious consumers are in a spending mood. And if shoppers aren’t in the mood, the deals could get much better later.

“If they’re not finding things at a price they’re wiling to pay, they may be willing to wait a little while,” said Erin Herskowitz, spokeswoman for the International Council of Shopping Centers, a trade association based in New York City. That’s the sort of thing retailers don’t need to hear.”

“A recent survey by Vertis Communications in Amesbury, Mass., found that 60% of Americans plan to cut back on their purchase, vs. only 40% who said so last November. The key for retailers is drilling home the idea that the deals shoppers will score on Black Friday are worth making the effort to get out there. For most malls and shopping center, Friday will be the first time this year that they see significant traffic in their stores and parking lots.”

“Last year, 66 million shoppers turned out for Black Friday, according to the National Retail Federation. And despite – or, perhaps, because of – tighter holiday budgets, more people are expected to brave the crowds this year, including people who usually don’t shop on Black Friday, according to the International Council of Shopping Centers. “Regardless of the economy, crowds will still turn out to shop, “because people who enjoy Black Friday enjoy the event and enjoy the event…” Kopacz said.

"One out of four Black Friday shoppers is expected to be at the stores by 5 AM. Kohl’s and J.C. Penney will open at 4 AM, followed by Macy’s, Wal-Mart and Best Buy at 5 AM and Target at 6 AM."

“85% of shoppers are looking to buy electronics, such as video game systems, iPods and MP3 players, flat panel TV’s, cell phones, camcorders and home theater systems, Consumer Reports says. Prices on big-screen HD televisions had already dropped by hundreds of dollars when Circuit City Stores announced it was closing 155 stores and liquidating its inventory before the end of the year. Best Buy will be selling a limited number of 52” Samsung flat-panel LCD HDTVs, plus installation and free shipping, for $1499.99, down from $2,299.99."

“Consumer electronics are going to be deeply discounted this year, we know that,” said Marti Kopacz, national managing principal for Grant Thornton’s Corporate Advisory and Restructuring Services in New York. “The Circuit City liquidations will push all other pricing down. Bes But as well as regional stores, all of them are going to have to drop prices.”

Black Friday sales typically account for about 10% of all Christmas sales, but Herskowitz of the shopping centers council said that percentage could increase this year. While sales at clothing, department and luxury stores are weak, she said wholesale clubs and discount stores, particularly Wal-Mart and BJ’s Wholesale Club, continue to fare well.”

“So far this year, cozens of retail companies have declared bankruptcy, closed stores or both. Despite dire warnings that more stores will close after the holidays if sales disappoint, retailers continue to project results as rosy and upbeat as the carols being played over their speakers. “Retailers are the most optimistic group of people you will meet in your entire life.” Kopacz said, “and the sun will always come up tomorrow.”