Shades of Gray for Black Friday - Holiday Central

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It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

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Nov.28

6:29 AM ET

Friday, 28 Nov 2008

Shades of Gray for Black Friday

Posted By:Christina Cheddar Berk

Topics:Advertising | Marketing | Consumers

Sectors:Retail

Companies:Best Buy Co Inc | Wal-Mart Stores Inc

Last year, retailers were struck with "Midnight Madness." This year, the early bird can hit snooze.

Stew Milne / AP

It's a subtle sign that retailers are opting to play it safe and be cautious about their expectations for Black Friday, the day after Thanksgiving, which has become known as the official kick-off of the holiday shopping season.

In recent years, retailers have pushed their store openings earlier and earlier, with many opening their doors at the stroke of midnight.

But this year, fewer stores are opening that early, including Wal-Mart Stores [WMT Loading... () ], the world's largest retailer, and Best Buy [BBY Loading... () ], a popular haunt for diehard Black Friday bargain-hunters thirsty for cheap electronics. Both have welcomed shoppers at 5 a.m.

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“Once retailers get a hold of a promotional concept, they usually don’t let it go,” said George Whalin, president of Retail Management Consultants.

Whalin said he sees later opening times as a sign retailers don't necessarily see longer store hours as equaling higher sales. This year, retailers hired fewer seasonal workers and a midnight store opening can stretch a smaller staff too thin.

Still, more consumers are saying they will be out shopping on Friday. Twenty-six percent of consumers surveyed by Consumer Reports said they plan to hit the mall this Black Friday. That's higher than last year, when 21 percent of consumers went shopping.

There are plenty of reasons for this. Topping the list are tradition and a more cost-conscious consumer than there's been in recent memory. But this also is a more condensed holiday shopping season, with five fewer days between Thanksgiving and Christmas than last year.

So why the caution?

The low prices don't necessarily mean shoppers will be busting down doors on Black Friday.

More than half of shoppers surveyed by Pricegrabber.com, a comparison shopping Website, said they were sticking to a budget to prevent impulse purchases.

“There are whole groups of consumers who are not spending any money on anything if they can help it and that group is larger than it’s ever been,” Whalin said.

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Sweet deals have already been plentiful this holiday season. As September came to a close, Wal-Mart began slashing prices on popular toys. Holiday dresses and suits were marked down before Halloween, and there were plenty of doorbuster deals the weekend ahead of Veterans Day. Many Websites, including Pricegrabber, are offering daily deals to keep customers coming back for more.

But Black Friday has come to be associated with bargains, and pricing will be aggressive.

It has to be, according to Mark Bergen, a pricing expert and marketing professor at the University of Minnesota’s Carlson School of Management.

"Budgets are shrinking," Bergen said. "Retailers have to get shoppers to buy that special item with them."

Bergen expects the best deals will be on the items shoppers have been most hesitant to buy — the expensive ones.

Pricegrabber.com President Ron LaPierre said he still sees visitors to his site searching for big-ticket items like plasma and LCD TVs, digital cameras, and Nintendo's Wii video game consoles, but he also has seen increased interest in less expensive toy categories such as puzzles and games, arts and crafts items and small appliances such as toasters. It also appears that consumers are researching more before making a big purchase.

Looking at Black Friday advertisements, there are a different mix of items being promoted, reflecting the expected shift to more practical gifts.

For example, Best Buy is still advertising "doorbuster deals" on big-ticket electronics, but another one of its special offers is a Guns 'n' Roses "Chinese Democracy" CD for $11.99. Yes, that's a whopping $2 savings from its list price. Remember, only one per customer, no rainchecks.

It's hard to think consumers will brave the cold, chilly night to save $2 on a CD.

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