November 29, 2013 / 8:55 PM / 4 years ago

UPDATE 2-U.S. Thanksgiving shopping binge brings Black Friday hangover

By Suzanne Barlyn, Phil Wahba, Marina Lopes and Dhanya
    NEW YORK, Nov 29 (Reuters) - U.S. retailers' controversial
choice to kick off the U.S. holiday shopping season early, on
Thanksgiving, may not pay off as much as they had hoped.
    Eager to entice cautious consumers, especially with six
fewer shopping days this year than in 2012, many retailers
launched sales on Thursday's U.S. holiday, traditionally a day
for family, friends and football games. Even Macy's Inc's 
flagship store in New York City opened then for the first time
in its 155-year history, at 8 p.m.
    Some U.S. shoppers played along, hitting the Internet and
stores on Thanksgiving. But by late Friday morning, foot traffic
looked a lot more like on a regular Saturday than the typical
Black Friday frenzy that kicks off the holiday season.    
    "It's a lot less than I thought," said Alison Goodwin, from
Horsham, Pennsylvania, who ventured to an area mall on Friday
seeking gifts and maybe something for herself.
    "It's like any weekend in December," Goodwin said.
    While mall traffic appeared slower than last year, overall
Black Friday online sales as of noon EST were up more than 7
percent from a year ago, according to IBM Digital Analytics
Benchmark. That came on top of the 19.7 percent increase on
Thanksgiving Day, the firm said.
    Wal-Mart Stores Inc U.S. Chief Executive Bill Simon
said Thanksgiving visits to stores of the largest U.S. retailer
surpassed last year's 22 million mark, and a swarm of online
shoppers temporarily crashed its online site.David Berman, founder of Durban Capital, a New York hedge
fund that specializes in retail and consumer stocks, said U.S.
shopping habits have permanently shifted with the exponential
rise in online shopping, thanks largely to smart devices,
notably Apple Inc's top-selling iPad.
    Sales of big-ticket items like smartphones have helped mask
weaknesses in traditional retail, he noted.
    "By our calculations, half of U.S. publicly held retailer
sales growth is coming from SAA (Samsung, Apple and Amazon),"
said Berman.
    Retailers often record the majority of their annual sales
during the end-of-year holiday shopping season, and rely on
discounts and marketing blitzes to try and grab a slice of
spending estimated at some $600 billion annually.
    The battle for the consumer dollar has been particularly
intense in a year when taxes have increased, unemployment has
remained stubbornly high, and confidence has taken a hit from a
recent government shutdown and uncertainty over the introduction
of President Barack Obama's healthcare reforms.
    Offsetting those negatives has been the wealth impact of a
rise in home prices and a rallying stock market, though those
are more likely to help the luxury end of retailing.
    Even Apple is not immune to this year's heightened
    A new Ipsos/Reuters poll found that, among consumers
thinking of buying a tablet, 21 percent favored Amazon Inc's
 Kindle Fire, followed by 19 percent for Apple's iPad
and 17 percent for Samsung Electronics Co Ltd's 
    In a rare gesture from the iPad-maker and a nod to intense
competition from Samsung, tech giants like Microsoft Corp
 and Google Inc, and online retailer Amazon,
Apple is offering gift cards worth up to $75 for every purchase
on its website. 
    Shoppers lured to a Target store in Bensalem,
Pennsylvania, by an even better iPad Air deal (a $100 Target
gift card along with the $479 device) arrived too late on Friday
morning, as the store had sold out.
    Reuters reporters in several U.S. cities found shoppers
cherry-picking discounted flat-screen televisions and other door
busters without adding higher-margin items to their purchases -
behavior that could bite into retail profits.   
    Overall, Berman said, "sales will eventually be OK but
margins won't." 
    EBay Inc was the second best performer in the
Standard & Poor's 500 index on Friday, gaining 2.5 percent, and
Best Buy was third, rising 2.4 percent. Apple and Amazon were
also in the top 10 on Friday, when trading closed early.
    Kohl's Corp and Nordstrom Inc fell 1.1
percent and 0.8 percent, respectively. 
    The National Retail Federation is predicting that sales for
the November and December holiday season will grow 3.9 percent
to $602.1 billion - excluding such items as gasoline, restaurant
meals or purchases of gift cards - leaving retailers to battle
for a bigger slice of that somewhat larger pie.
    However, NRF estimates each consumer will spend an average
of $737.95 during the season, down 2 percent from 2012. Its
forecast is based on an online survey and actual spending,
including on gift cards. Retailers book gift card sales when the
cards are used to make actual purchases.
    While growing briskly, online sales still account for a
small portion of overall sales in November and December. Holiday
sales are forecast to grow 13 to 15 percent to as much as $82
billion, according to
    This year's holiday shopping results likely will mimic the
slow-growing U.S. economy, said Can Erbil, an adjunct associate
professor of economics at Boston College.
    "Last year's shopping season was actually pretty bad. The
Connecticut school shootings, Hurricane Sandy, and fiscal cliff
fears really hit the shopping season hard. So the benchmark is
low," Erbil said.
    The sea of holiday deals failed to impress some shoppers. 
    For Luis Figueiro, a retired Brazilian on vacation in New
York, called the scene at Macy's flagship store on Thanksgiving
evening "madness" and said the mobs of shoppers made it
difficult to see the products on sale.
    His wife, Irene, traveled with him from Rio with Black
Friday deals in mind, but was disappointed to find that many
items were not discounted.  
    "If someone comes without a clear notion of prices, it
awakens something in you. But if you know what the items usually
cost, you aren't fazed," she said.
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