Black Friday Beginning to Backfire for Retailers

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Walmart Black Friday 2012

By some accounts, it was a record Thanksgiving weekend this holiday, with sales up 13 percent over last year.

Walmart Black Friday 2012
Walmart over Black Friday week 2012

From Black Friday, November 22 through Sunday, spending passed $59 billion, compared to $52.4 billion last year, said the National Retail Federation (NRF).

But the holiday may have outlived its useful purpose to retailers as a result of its success, said the NPD Group.

Black Friday, or the full Black Friday period, is gobbling up about 56 percent of tech sales during the holiday season.  That means only 44 percent of tech purchases over the holidays will occur at more profitable prices.

“It’s tough to build a great holiday season, with…sufficient profits when this week accounts for such a high percentage of sales and so much of those sales are dependent on blowout products and prices,” said NPD analyst Steve Baker.

John Abt, owner of Abt Electronics in Glenview, IL (which sells car audio as part of its mix) told The Wall Street Journal, “I fear we are conditioning the customer to shop only on this one weekend.”  Abt’s Black Friday sales rose 22 percent this year and Abt’s Internet sales spiked 64 percent on Thanksgiving.

The twist on this year’s Black Friday is that it has become a 4-day event, stretching from Thanksgiving through Cyber Monday.  Thanksgiving attracted 35 million shoppers this year, up from 29 million last year, said the NRF. And Cyber Monday started on Sunday this year at Best Buy and some other retailers.

Each consumer spent on average about $423 over the weekend, up 6 percent from last year, according to BIGinsight.  But it’s possible the totals may be stealing from spending over the rest of the holiday, said analysts.

NPD’s  Steve Baker suggests retailers “rethink the value proposition that Black Friday has become.”

Source: BusinessWeek, The NPD Group, The Wall Street Journal

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2 Comments

  1. What part of this is NEWS?? If retailers do 30% of their volume during this period, and 54% of it is not profitable, where is the business model? The crazy part is specialty retailers trying to play that game. They don’t have the volume and cash flow to at least partially offset the loss in gross profit. Specialty retailers MUST tell a different story, project a different image, and appeal to a different part of consumer psyche.

    1. Specialty retailers don’t have to tell a different story during a holiday sales event such as Black Friday. It’s about mass volume… ordering more and smarter and becoming more profitable through the back end with discounts and increased sales. These sales events in turn will create a positive cash flow with more labor and more sales of accessories and other possible add ons during installation times. It’s about creating excitement and the ability to get people to focus on spending while in your store with a far greater personalized touch and expertise than those big box stores. The days where uneducated, uniformed customers walking through our doors and spending exhorbitant amounts of money are long gone. It’s about making a dollar off of millions, not a million off of one. Stop living in the 80’s… I was a rep for a while… this is why I became a store owner, so I could run circles around other shop owners that shared your business practices. Quit telling people to be strategically better… show them how if you believe in your own advice.

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