Black Friday Showdowns: How 10 Top Retailers Plan to Compete
These high-stakes Black Friday sales will see tears, injury, and mobile news vans.
From early promotions to deep discounts on the most sought-after gifts, Minyanville has profiled some of the market’s biggest mercantile arch rivals to see what tactics they’ve employed to claim the bigger slice of this year’s $466 billion Black Friday pie.
Walmart vs. Target
These two discount chain heavyweights, with the most to lose given their shared cash-strapped consumer base, have taken varying strategies to cope with this year’s predicted 2.4% decline in holiday shopping sales.
Although the company attracted some backlash from Black Friday purists, Walmart (WMT) got a long leg up on the competition by getting down to business three weeks ahead of schedule this year. November 5 marked Walmart’s earliest-ever annual in-store "Super Saturday Sale" event followed by a full month of online deals leading up to Thanksgiving eve. That’s when the first of three rounds of doorbusters begin, starting with toys at 10 p.m., with electronics coming online at midnight and general merchandise at 8 a.m.
Target (TGT), meanwhile, is staying more, well, on target by adhering to Black Friday proper and not a minute later to launch its holiday sales season. This year’s two-day sale, on the heels of its third-quarter earnings report of $555 million or a 10.2% earnings-per-share increase over 2010, is starting four hours earlier than normal -- at the stroke of midnight on November 25 -- but it may be too late. Ignoring the newly minted Walmart-ian calendar could hurt Target’s bottom line if the analysts who say retailers "want to make sure they are getting consumer dollars before anyone else" are right.
One promotional trick up Target’s sleeve: The store began giving away $25 gift cards to 25 people daily through an app on its Facebook page. Winners will be selected until November 22.
If you can take your own $25 to Walmart, however, your dollars may go further. A new price comparison of 100 top holiday toys shows that Walmart has not only closed Target’s 0.5% lower price gap from two weeks ago but created its own sales schism that continues to widen. One item at the top of children’s lists, Hasbro’s Let’s Rock! Elmo, is now 4.7% cheaper at Walmart. Reinstating its layaway program after a five-year hiatus is another maneuver to ambush Target’s toy business. Finally, Walmart’s Christmas Price Guarantee promises the lowest price or makes up the difference in a gift card to be spent at Walmart before December 25.
This sales-on-steroids approach is luring customers as well as investors. As of the close of trading on Friday, Walmart stock was up 0.88% to $57.23, while Target saw more modest gains of 0.68% to $53. After failing to meet Wall Street expectations last quarter, with profits down 2.9%, Walmart is aiming its prices low for a big holiday sales bump.
Kohl's vs. Macy's
Middlebrow rivals Kohl's (KSS) and Macy's (M) have also succumbed to this early bird pressure, welcoming bleary-eyed shoppers who will barely get in a catnap between the Thanksgiving table and the shopping aisles when the stores open their doors at midnight. Both retailers hope to keep up the momentum of their positive third quarters -- Macy’s earning $139 million and Kohl’s net income surging to $211 million -- heading into the holiday season.
Kohl's will be banking on the strength of its exclusive clothing lines -- like the Jennifer Lopez and Marc Anthony collections -- which account for about half of its total sales. The retailer also hopes to lure holiday shoppers with its first ever offer of $15 in Kohl’s cash for every $50 spent between midnight Friday through Sunday and redeemable until December 5.
Utilizing technology and the Internet has been a large part of Macy’s promotions strategy for capturing holiday market share. “The quality and creativity of our marketing support for holiday is the strongest ever," said Macy’s President and CEO Terry J. Lundgren. The retailer began leaking its Black Friday deals every week since Halloween through its Facebook site. While Macy’s Black Friday event will be largely confined to its brick-and-mortar stores, some discounts -- like 20% off dresses and 40% off coffee makers and teapots -- will be available online starting at midnight Friday.
Sears vs. J.C. Penney
Two department store dissenters, Sears (SHLD) and J.C. Penney (JCP), have dared to keep the Thanksgiving throngs at bay until 4 a.m. Black Friday morning. Whether unmotivated as a matter of principle or operating costs, both retailers are allowing themselves to get left behind the unseasonal frenzy and can expect their customers to get poached by competition during those first critical hours.
Sears and J.C. Penney need to be using the holidays as an opportunity to make up for lost third-quarter profits, as both reported weaker results than one year ago. J.C. Penney took a $143 million hit compared to a gain of $44 million at the same time last year.
Sears’ stock declined 4.4% to $65.22 a share with an adjusted loss of $2.57 per share on revenue of $9.57 billion. The retailer’s financial outlook remains as bleak as its threadbare interiors. For years, analysts have been predicting Sears' doom. As MSN Money put it in 2009, “Sears remains one of the great mysteries in retail: It's not clear why it still exists.”
Sears has attempted to pre-empt its rivals’ nocturnal holiday events with this past weekend’s Super Saturday online and in-store promotions. However, the retailer released its Black Friday circular to little fanfare since many of the prices advertised, especially for big-ticket items like HDTVs, don’t beat those listed by Walmart, Best Buy (BBY), and Amazon (AMZN). Sears’ real sales strength will remain in its appliance discounts, where shoppers can expect 50% off Kenmore washers and dryers and $200 dishwashers.
J.C. Penney held its own online “gift busters” sale over the weekend, and the website offered a detailed preview of its two-day Black Friday sale of over 500 items. J.C. Penney will allow shoppers to access Black Friday deals online on Thanksgiving day.
Amazon vs. Barnes & Noble
After a sluggish third quarter for the Internet retail juggernaut, Amazon has been ramping up to its “Black Friday Deals Week” with, you guessed it, deals. To help offset its 73% belly flop in net income ($231 million to $63 million) resulting from the massive investment in the Kindle Fire eBook reader and increasing operations costs, Amazon has decided to redefine the holiday season altogether.
“When is Black Friday?” asks the company. “Black Friday isn't until the day after Thanksgiving, but since you're here already, looking for Black Friday deals, we got the deals going a little early.” A Gold Box deal and multiple Lightning Deals have been available online on a daily basis for weeks.
One such bargain, on one of the most in-demand gadgets this season, its Kindle Fire, is already on sale for $199 while stores like Walmart are sticking it out until Black Friday to match that price.
Though its the world’s largest bookseller, Barnes & Noble’s (BKS) bread and butter has been its e-reader business, with monster revenue growth of 140% year-over-year. This season’s Nook Touch Reader and Nook Tablet will not only drive its holiday sales, but could pose a serious threat to Amazon’s new flagship Kindle products. Other retailers, including Amazon, will be selling the Nook line, but Barnes & Noble CEO William Lynch believes shoppers will buy from his store this Black Friday for its customer service.
At the end of last holiday season, in-store support was cited as one of the top reasons customers bought the Nook over the Kindle, and since women are the Nook’s key customer base, Barnes & Noble’s marketing strategy is aimed squarely at them. Exhibit A is the current holiday ad featuring "Glee" star Jane Lynch, who touts “Nook support is always free!”
Barnes & Noble has not yet announced its slate of Black Friday offerings. Its Nook Tablet remains priced at $249, the Nook Color is selling for $199, and the Nook Touch costs $99.
Home Depot vs. Lowe's
“We’ve all got garlands and budgets to stretch,” declares Home Depot’s (HD) latest holiday commercial.
The world’s biggest home-improvement retailer is appealing to the frugal-minded this season who have put their own wanton wish fulfillment on hold until now.
"Consumers have been deferring purchases and practicing fairly severe austerity since the beginning of the recession,” said Lew Paine, VP of research firm GFK Consumer. “The holiday season provides them with a positive rationalization for personal rewards through self-gifting.”
These are precisely the recession-weary shoppers for whom Home Depot and its main competitor, Lowe's (LOW), are duking it out.
While Home Depot is promoting sales on holiday decor and accessories, the headliner is its "Appliance Holiday Savings Event" that’s already been well under way -- adding itself to the list of Black Friday revisionists. Home Depot is translating its 12% third-quarter profit gain of $934 million into discounts up to 40% on washers and dryers, stoves, and dishwashers. A Maytag stainless steel French door refrigerator that originally retailed for $2,699 is now $900 off.
The market hasn’t been quite so kind to Lowe's, which saw profits drop from $404 million to $225 million last sales quarter. But Lowe's is taking a page from its rival’s coupon book with early and enormous sales leading up to Black Friday, like an entire Frigidaire kitchen suite discounted at $1,996 from $3,096.
This year, Lowe's has made clever use of its social media platforms as Black Friday promotional tools. The retailer’s Black Friday Throwdown event is linked to a Facebook contest/game that offers customers a chance to win a $100 Lowe's Gift Card or a few dozen of its top deals. Employing a like-gating practice, Lowe's allowed shoppers a sneak peek at its Black Friday offers when they gave the store that coveted thumbs-up on Facebook.
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