For retailers, the upcoming Thanksgiving holiday traditionally signals the beginning of the do-or-die holiday selling season. The question worrying Wall Street and retailers alike this year is will the results justify the hype?
Listening to the third quarter earnings and revenue guidance from retailers last week, there was little to applaud. Department stores were especially downbeat on their expectations for the entire 2015 holiday shopping season. Big discount stores, like Walmart, were less negative, and argued consumers were simply keeping their powder dry, while waiting for next weekend’s super deals.
Some analysts argue that the disappointing earnings most retailers posted had more to do with the exceptionally warm fall weather we have been experiencing than lack of shopper enthusiasm. October, after all, will go down in the history books as the warmest October on record. That had to hurt winter clothing and apparel sales.
You may have noticed that the usual sales hype we come to expect wherever we look about now has been somewhat muted over the last week. That may have more to do with the terrorist bombings in Paris than anything else. Promoting the latest gizmo for your dog, or a better hair curler to de-frizz your hair may not be as meaningful to you when Parisian cops are storming apartment buildings and Russian planes are blowing up over Syria.
Most pundits are expecting a 3.7% rise in retail sales, which is below last year’s 4.1% gain. Is it the economy, the weather, geopolitical events or changing tastes really behind the slowdown, or is Black Friday losing its mojo?
Officially, Black Friday was an invention of the American retail sector wishing to goose their holiday sales. I remember back in the 1960s growing up in Philadelphia when the city’s police department called the day after Thanksgiving “Black Friday,” because of the traffic jams and crowded sidewalks that launched the holiday season. Retailers embraced the concept and attempted during the 1980s to transform the event into a family shopping tradition.
Over the years, however, as the numbers of “door busters” multiplied, and ad budgets skyrocketed, it created some unanticipated results. Long lines, combined with a heightened mood of “get it first at any costs, led to some very un-Thanksgiving moments. Highly publicized damage to stores, fistfights among shoppers and other injuries, have led many to forsake this so-called tradition.
At the same time, retailers, in their drive to capture every available dollar of the consumer’s money, pushed forward store opening times from early Friday morning to midnight to the recent decision to open their doors on Thanksgiving Day. For many, that latest move was the final straw that led to increased disenchantment with the entire idea. Labor organizations and social media campaigns have reacted by calling for consumers to boycott stores that have pushed the concept over the edge.
Then too, some shoppers report a sense of fatigue as the holiday chatter escalates. The “only X days to Christmas” countdown has backfired on many of us. We find ourselves rejecting this pressure to spend, spend, and spend on the perfect gift that probably does not exist.
Then too, the overall importance of the year-end holiday sales season is waning. Competition among retailers is now so intense that some merchants are offering Black Friday-like sales in the middle of the summer. Others have been offering holiday discounts on merchandise for weeks and intend to keep offering it well after year-end. Shoppers now expect sale events on every major holiday. Not to be undone, stores are even inventing more holidays like “Single’s Day” to lure shoppers. As a result, retail spending has become far more dispersed throughout the year.
If this is the case, why then do retailers continue to hype a concept that generates at least as much ill will as it does good will? For mass retailers, it is all about competition. Every dollar you spend elsewhere is a dollar they have lost. They are on a treadmill of their own making and haven’t yet figured a way of getting off. When that occurs is up to us.