Amid declining consumer confidence, kickoff to holiday shopping season looks mixed.
This year's Black Friday won't be so sunny for the nation's retailers.
Black Friday, the first shopping day after Thanksgiving and the traditional kickoff to the holiday shopping season, is often the day that nudges retailers into profitability for the first time of the year. Black Friday doesn't forecast holiday sales, but is often a good gauge of shoppers' willingness to spend. Last year, the weekend after Thanksgiving totaled about 10% of holiday sales.
This year isn't looking good amid the credit crunch and declining consumer confidence. Many retailers stress sales in an effort to get what they believe will be reluctant shoppers through the front door.
In general, analysts look for flat-to-declining sales this holiday season. The dollar total may be up thanks to inflation, but unit sales are expected to fall about 1%. The Nielsen Consumer Household survey found that 33% of the nation's households across all income levels are likely to spend less this holiday season.
Retail chains are extending hours by opening unusually early, or keeping door open until midnight. Market segmentation, sharply defined categories and retail channels will be vital to preventing a downbeat year from becoming a disaster.
Just about everyone is getting into the act this year: Wal-Mart (WMT) will try to entice shoppers with a Blu-ray player for $128. Best Buy (BBY) plans to offer coffee and donuts for shoppers lining up before it opens its doors at 5:00 a.m. Target (TGT) will give customers store maps showing the location of sale items.
But sales and endless ballyhoo may not be enough to boost sales. Plunging home prices makes people feel poor. And the unemployment rate is now 6.5%, up from 6.1% in October, which leads many people to sit on their money.
Unfortunately, declining retail sales mean less sales tax revenue for state and local governments. Many states and cities overspent during the boom years and now face a budget crunch.
Last year's holiday online sales were up about 19% over 2006. The forecast for online sales ranges from a slower rate of increase to a slight decline Forrester Research expects online retail spending to total $44 billion in November and December, up just 12% from last year.
Here's betting Black Friday opens strong, but sales activity declines throughout the weekend.
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