Black Friday Prediction Part 1

Tomorrow is the day.

Last year I actually went out on Black Friday and bought a TV.

This year I'll just stay in my Turkey Coma, while the masses go crazy.

Flood of Pent-Up Consumer Demand Predicted for Black Friday

Get out your coffee and your coupons. Black Friday, the traditional start of the holiday shopping season, is about to get bigger.

For the past several years, Black Friday has ranked as the largest shopping day of the year, in both sales and traffic. But analysts say a host of factors is converging to make it likely that Black Friday 2010 will set a record.

Americans have been saving more money than usual, leaving them poised to make a big purchase. They are researching prices and compiling targeted shopping lists, opening their wallets only when they see a good deal on something they really want. And more consumers are delaying spending until a retailer has a specific sale event, usually tied to a weekend holiday, such as Black Friday or Memorial Day.

While no one is predicting the rampant discounting of the past two holiday seasons, retailers still are facing intense pressure. Shoppers have toned down their spending habits from the pre-recession binge, and that means retailers are forced to grow by taking market share from each other.

With so much spending enthusiasm distilled into one shopping day, merchants are doing all they can to grab a piece of the action.

"It's been a boring year in retail, but in the next six to eight weeks, it is going to break out into a civil war," said Brad Wilson, founder of BradsDeals.com, a Chicago-based online deal aggregator. "Retailers are fighting for a smaller pie, and the only way to win is to beat each other."

Wilson's BlackFriday2010.com Web site, launched in October, is already getting 20,000 visitors a day.

Meanwhile, the first Black Friday sales are starting this week.

Sears Holdings Corp. is bringing back its "Black Friday Now" sales, complete with doorbuster deals, at its Sears stores every Friday and Saturday leading up to Black Friday on Nov. 26. The campaign, which starts Oct. 29, gives the Hoffman Estates-based department store chain a chance to reel in sales before larger rivals such as Wal-Mart Stores Inc., Target Corp. and Amazon.com Inc. unleash their pricing power.

On the other hand, Banana Republic, the upscale clothing chain owned by Gap Inc., is doing the opposite. Knowing that its core customer avoids the Black Friday crowds but still wanting to get in on the action, Banana Republic is holding a "Not Black Friday" sale the Friday after Black Friday.

"This is going to be a problem throughout November as retailers will be attempting to attach the words 'Black Friday' to as many sales promotions as possible," the operators of BFAds.net, another Black Friday online deal aggregator, told its readers. "There will be very many good sales in the next five weeks leading up to Black Friday, but there will also be an equal amount of mediocre sales masquerading behind the Black Friday name."

Not everyone is buying into the Black Friday boom. Accenture, the consulting firm, said it sees signs of Black Friday apathy. In a survey released earlier this month, Accenture found that 47 percent of consumers intend to shop on Black Friday, compared with 52 percent last year.

Still, consumer electronics stores count on the day more heavily than other retailers, and this year will be no exception.

IBM Corp. forecasts a 4.6 percent rise in consumer electronics sales, to $20.9 billion, for the combined months of November and December from the same period in 2009, a feat that if reached would mark a post-recession high.

Consumer electronic sales in November alone are forecast to rise 4.8 percent, to $8.7 billion, from the same period last year, fueled in large part by Black Friday activity, according to the IBM analysis, released last Thursday.

While IBM doesn't forecast total retail holiday sales, its consumer electronics prediction exceeds the roughly 2 percent to 3 percent retail sales gain that various retail economists anticipate for the holiday season as a whole.

The forecast suggests retailers should be ready for a "robust" Black Friday, said Michael Haydock, global business services partner for IBM. Retailers that increase their staffs, bulk up on inventory and invest in advertising will have an advantage, he said.

Consumers no longer look at consumer electronics as discretionary purchases, but as necessities that make their households and offices run more smoothly, he said.

That logic makes it easier to spend.

"The consumer is recovering this year," Haydock said. "Last year the consumer was still tainted by the recession."

Another factor expected to fuel consumer electronic sales: 40-inch and 42-inch flat-screen TVs are dropping below $500 this holiday season, a psychological price barrier that should unleash a flood of pent-up demand at electronics stores, said consumer behavior researcher Brit Beemer, founder of America's Research Group in Charleston, S.C.

Yet, Beemer warns the following weeks will likely be quiet as shoppers go home and wait for the last-minute Christmas deals. He predicts shopping will happen in spurts, making it tough on merchants to figure out what shoppers are going to do next.

"I think it's going to be a crazy Christmas," he said.

(Source: Chicago Tribune, 10/21/10)

Sphere: Related Content