Black Friday sales: How deep will the discounts be this year?
Big discounts await shoppers during Black Friday sales the day after Thanksgiving. But later in the season, price cuts are unlikely to be as deep as they were last year.
New York — Kohl's will sell Tony Hawk jackets and T-shirts at 50 percent off. Sears will slash the price of a Curtis Compact DVD player by 40 percent. Target wants to entice you into a store by offering 18 percent off a Garmin Global Positioning System.
These are some of the big discounts slated for Black Friday – one of the most important shopping days of the year for retailers, when they get a good sense of the strength of holiday sales, and hence their yearly profits. Just like last year, when stores were so desperate to make sales that they practically paid you to shop there, retailers are chopping prices on certain goods to get you in the door on Nov. 27.
This year's loss leaders are electronics, certain toys, and brand-name clothing, like that from skateboard icon Tony Hawk. But beware: Sale items may sell out quickly, and discounts later in the holiday season are not likely to be as deep as they were in 2008.
"There will be more bargains earlier and less later in the season, because last year the retailers got caught with a lot of inventory," says Kevin Strawbridge, CEO of DealTaker.com, a website that publishes Black Friday promotions. "We are telling people, ‘If you see a deal early and it's something you want, buy it.' "
The discount strategy should work, say retail analysts. A recent case in point: "Cash for Clunkers."
Even before Black Friday, some retailers were offering special promotions, in a bid to ace out the competition. Target, for example, was selling toasters and coffeemakers for $3 apiece and a 32-inch high-definition television for $246.
"Target is being really aggressive because they want to compete head-on with Wal-Mart," says Mr. Strawbridge.
But even with the promotions, it could yet be a bah-humbug season. The National Retail Federation (NRF) forecasts a decline of 1 percent in holiday sales over the same period last year.
"We are seeing the consumer lagging the rest of the economy," says Rosalind Wells, NRF chief economist. "The reasons the consumer is lagging [are because] the employment situation is so dismal and there is no income growth – both factors that propel consumer spending."
In the past, many consumers used their homes as piggy banks, getting home equity loans that took advantage of rising home values. But with home prices falling, this option is gone. The stock market is up more than 20 percent this year, but, as Ms. Wells notes, "the average person is not in the market that heavily."
If NRF's forecast is correct, 2009 will be the second down year in a row for retailers. Last year, holiday sales fell almost 6 percent from the same period in 2007, the steepest drop in 40 years. To try to prevent that, retailers are getting creative.
Take Disney Stores. In a new twist, the company started showing its Black Friday promotions via YouTube on Nov. 12. It will also open 125 stores at midnight on Nov. 27; last year it opened 100 at that hour on Black Friday. "It's a great way to spread the traffic out, manage our flow," says Jim Fielding, president of Disney Store Worldwide, who went out at midnight last year to watch shoppers at one of the stores.
Online retailers, too, plan to lob promotions at customers. Ed Foy of eFashionSolutions in Secaucus, N.J., is planning "timed" promotions, in which shoppers have a set amount of time to respond to a sale or an offer of free shipping.
"I'll pull the ads that are interesting," he says. In the past, he has been enticed by ads for flat-screen televisions and tools.
"I am probably not the best target. I'm a buyer, not a shopper," he says. A buyer, he explains, goes to the store and buys a specific item; a shopper might go for one item but leaves with several.
By that definition, Melanie and Jessica Simmons, sisters from West Chester, Pa., are shoppers. They have been getting up at 3 a.m. on Black Friday for years, ready to hunt for bargains. They say they will hit Target and Wal-Mart, plus the strip malls.
"It takes the sales to motivate us," says Melanie. "We like to get crazy deals for good stuff."
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