US retailers’ controversial choice to start the US holiday shopping season early, on Thanksgiving, may not pay off as much as they had hoped.
Eager to entice cautious consumers, especially with six fewer shopping days this year than last year, many retailers launched sales on Thursday’s US holiday, traditionally a day for family, friends and football games.
Some US shoppers played along, hitting the Internet and stores on Thanksgiving.
However, by late Friday morning, foot traffic looked a lot more like on a regular Saturday than the typical Black Friday frenzy that starts the holiday season.
While mall traffic appeared slower than last year, overall Black Friday online sales as of noon EST were up more than 7 percent from a year ago, according to IBM Digital Analytics Benchmark.
That came on top of the 19.7 percent increase on Thanksgiving Day, the firm said.
Wal-Mart Stores Inc US chief executive Bill Simon said Thanksgiving visits to stores of the largest US retailer surpassed last year’s 22 million mark, and a swarm of online shoppers temporarily crashed its online site.
David Berman, founder of Durban Capital, a New York hedge fund that specializes in retail and consumer stocks, said US shopping habits have permanently shifted with the exponential rise in online shopping, thanks largely to smart devices, notably Apple Inc’s top-selling iPad.
Sales of big-ticket items like smartphones have helped mask weaknesses in traditional retail, he said.
“By our calculations, half of US publicly held retailer sales growth is coming from SAA [Samsung, Apple and Amazon],” Berman said.
Retailers often record the majority of their annual sales during the end-of-year holiday shopping season, and rely on discounts and marketing blitzes to try and grab a slice of spending estimated at about US$600 billion annually.
The battle for the consumer dollar has been particularly intense in a year when taxes have increased, unemployment has remained stubbornly high, and confidence has taken a hit from a recent government shutdown and uncertainty over the introduction of US President Barack Obama’s healthcare reforms.
Offsetting those negatives has been the wealth impact of a rise in home prices and a rallying stock market, though those are more likely to help the luxury end of retailing.
Even Apple is not immune to this year’s heightened competition. A new Ipsos/Reuters poll found that, among consumers thinking of buying a tablet, 21 percent favored Amazon Inc’s Kindle Fire, followed by 19 percent for Apple’s iPad and 17 percent for Samsung Electronics Co Ltd’s Galaxy.
In a rare gesture from the iPad-maker and a nod to intense competition from Samsung, tech giants like Microsoft Corp and Google Inc, and online retailer Amazon, Apple is currently offering gift cards worth up to US$75 for every purchase on its Web site.
Reuters reporters in several US cities found shoppers cherry-picking discounted flat-screen televisions and other door busters without adding higher-margin items to their purchases — behavior that could bite into retail profits.
Overall, “sales will eventually be OK, but margins won’t,” Berman said.
The US National Retail Federation is predicting that sales for the November and December holiday season will grow 3.9 percent to US$602.1 billion — excluding items such as gasoline, restaurant meals or purchases of gift cards — leaving retailers to battle for a bigger slice of that somewhat larger pie.
However, NRF estimates each consumer will spend an average of US$737.95 during the season, down 2 percent from last year.
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