Retail sales a big turkey despite larger crowds
NEW YORK - Did stores shoot themselves in the foot?
Target, Macy's and other retailers offered holiday discounts in early November and opened stores on Thanksgiving Day. It was an effort to attract shoppers before Black Friday, the day after Thanksgiving that traditionally kicks off the holiday shopping season.
Those tactics drew bigger crowds, but failed to motivate Americans to spend.
A record 141 million people are estimated to have shopped in stores and online over the four-day Thanksgiving weekend that ended yesterday, up from last year's 137 million, according to the results of a survey of nearly 4,500 shoppers conducted for the National Retail Federation.
But total spending is expected to fall for the first time since the trade group began tracking it in 2006, according to the survey that was released yesterday. Over the four days, spending fell an estimated 2.9 percent to $57.4 billion.
The survey underscores the challenges stores have faced since the recession began in late 2007. Retailers had to offer deep discounts to get people to shop during the downturn, but Americans still expect those "70 percent off" signs now during the uneven economic recovery.
Stores may have only exacerbated that expectation this year. By offering bargains earlier in the season, it seems they've created a vicious cycle in which they'll need to constantly offer bigger sales to get people to spend. That's because shoppers who took advantage of "holiday" deals before Thanksgiving may have deal fatigue and are cautious about buying anything else unless it's heavily discounted.
"The economy spoke loud and clear over the past few days," said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors. "We are going to see an increase in markdowns."
Matthew Shay, president and CEO of the National Retail Federation, said that the survey results represent only one extended weekend in what is typically the biggest shopping period of the year. The combined months of November and December can account for up to 40 percent of retailers' revenue.
Overall, Shay said the trade group still expects sales for the combined two months to increase 3.9 percent to $602.1 billion. That's higher than the 3.5 percent pace in the previous year.
But to achieve that growth, retailers will likely have to offer big sales events. In a stronger economy, people who shopped early would continue to do so throughout the season. But analysts say that's not likely to be the case in this still-tough economic climate.
"It's pretty clear that in the current environment, customers expect promotions," Shay said. "Absent promotions, they're not really spending."
At least a dozen major retailers - most of them for the first time - opened on Thanksgiving instead of on Black Friday, which is typically the biggest shopping day of the year. Wal-Mart, Toys "R" Us and other retailers said Friday that Thanksgiving crowds were strong.
But the early start appeared to pull sales forward. Black Friday sales fell 13.2 percent from the previous year to $9.74 billion, according to Chicago-based technology firm ShopperTrak. But combined spending over Thanksgiving and Black Friday rose 2.3 percent to $12.3 billion compared with a year ago.