Advantage consumer in annual US holiday shopping sprint
As "Black Friday" kicks off the annual holiday shopping season, US retailers are hopeful in light of stock market records and job growth, but leery of cut-throat pricing from online competition.
The annual shopping frenzy once again kicked off late Thursday after the Thanksgiving holiday feast, with millions of Americans trekking to the malls after gorging on turkey, stuffing and pumpkin pie. The throng swelled Friday, a day forever associated with endless lines and stampede-like rushes for bargain deals.
Among the chief lures of this year's Black Friday offerings, Wal-Mart has slashed prices on high definition television sets and drones that can fly up to a half-mile from its operator.
Target, Wal-Mart's smaller rival has amassed some 1,800 new toys exclusively available at the multi-purpose retailer, while Apple is luring gadget-seekers to its stores with $150 gift cards with the purchase of a new laptop.
Retailers are cautiously upbeat about the 2016 installment of the seasonal US shopping spree, which can account for as much as 30 percent of a chain's annual sales.
Supporting that optimism is low unemployment, fairly cheap gasoline prices and stock market records that have left many consumers feeling flush with cash. Some analysts also said Americans who held back spending during the contentious 2016 presidential campaign may be ready to open the spigots now that the election is over.
Several leading retail analysts project a three to four percent rise in holiday shopping sales in 2016 compared with last year.
Still the industry is bracing for another round of brutal price competition as the continued rise of online shopping gives consumers more options and therefore more of an upper hand.
"Is the promotional environment this year likely to be more subdued?" Best Buy chief executive Hubert Joly asked on a conference call last week. "Short answer is no."
The electronics retailer has had to adapt to "peaks and valleys" in traffic throughout the four-week sprint to Christmas because "the consumer has been trained to shop when the prices are more promotional," he said.
Wal-Mart, the world's biggest retailer, sent a warning to its peers, including archrival Amazon, earlier this month.
"I said it before and I will say it again, we will win the season on price ?- on Black Friday, on 'Cyber Monday' and every day before and after," said Wal-Mart chief marketing officer Steve Bratspies.
- 'Death spiral' for malls? -
This season comes as leading chains, including Macy's and Gap, have closed stores in a trend that many experts believe will increase in the years ahead.
An April report by Green Street Advisors urged more companies to shutter stores in light of an industrywide decline in department store sales for almost a decade.
The report warned that "several hundred malls" were at risk over the next 10 years, with "troubled malls" co-anchored by Sears, J.C. Penney and Macy's "at the greatest death spiral risk."
To stay relevent, stores like Bed, Bath & Beyond and Pottery Barn offered free shipping for sales on Thanksgiving evening.
Target increasingly offers direct delivery to customers from stores in their neighborhoods. Shops also are using more in-store demonstrations and events to attract customers and boosting mapping capacities on mobile apps to help guide shoppers. All that is in addition to the usual round of price cuts.
Most of these initiatives come at a cost, though retailers see them as long-term investments as they seek to build their online link to customers.
"It could be while retailers have an okay Christmas from a sales point of view, from a profit point of view it's not as healthy as it was last year," said Neil Saunders, managing director at Conlumino, a retail consulting firm.