U.S. retailers are preparing for a weekend of carefully planned promotions and unique merchandise to bring consumers into stores on Black Friday, the shopping day after Thanksgiving, when stores will implement their most ambitious discounting and marketing plans of the year.
Companies held steady inventories in September, even as sales grew, according to the Commerce Department. Now signals are indicating that personal consumption is picking up, quickening to an annualized pace of 2.4% in the third quarter, according to Commerce. Stores have been tightly monitoring their popular items and taking care to manage that customers may easily find them. If your inventories are out of wack, it has shown through,” said independent Wall Street retail analyst Brian Sozzi.
The lower inventory units should work in retailers’ favor as consumers hunt for hot items” writes Caris & Company retail analyst Dorothy Lakner.
Going into the holidays with sharp promotions is one thing, but stores are thinking more creatively to lure shoppers to items like electronics and toys. Wal-Mart will use a staggered sale approach this year, which offers discounts in certain departments at different times of day to encourage continued shopping throughout the day.
The holiday shopping season is an important time for companies and analysts to measure the spending behavior of consumers. Consumer spending, which makes up about 70% of the U.S. gross domestic product, is expected to be about in line with its activity last year, which had more pent-up demand and a larger trough to climb. The National Retail Federation expects retail sales to grow 2.8% this year, slower than last year's 5.2% increase.
Economists are predicting that economic growth will quicken to its fastest pace this year in the fourth quarter. The economy expanded at an annualized pace of 2% in the third quarter, according to the Commerce Department. Analysts expect growth to accelerate to 3.2% in the fourth quarter.
While retailers that target higher-end consumers have outperformed those for the middle-range and bargain consumers this year, the landscape may be beginning to improve for all. “As we look out to 2012 and lower product costs, the group should gain broader interest from investors,” Lakner said.
Another strong point is the innovative product, Sozzi says. Apple has been an example for several years, as its iPhone and iPod products have repeatedly outpaced sales estimates. Other retailers with products that are innovative and interesting may have a higher chance of appealing to consumers’ pocketbooks this quarter, Sozzi says.
More consumers, 17% compared with 12% last year, say that intend to start their holiday shopping on Thanksgiving weekend this year, according to NPD Group.
“It seems [stores] are all trying to beat each other by opening earlier and earlier this year,” said Marshal Cohen, chief industry analyst, The NPD Group, Inc. Macy’s Kohl’s and Target all will have midnight openings this year. Alongside early openings have been strong store promotions at retailers like Abercrombie, American Eagle and Gap. All added promotions to their stores the weekend before Thanksgiving.
- Commerce Department