It may be known as Black Friday, but the day after Thanksgiving could be the start of a Blue Christmas for retailers as customers rein in spending to cope with gasoline prices and rising heat costs.
Discount retailers and some mid-priced department stores are expected to aggressively slash prices Friday to appeal to reticent shoppers. That’s an abrupt change from last year, when retailers such as Wal- Mart held back on big promotions until later in the season.
“We’re already seeing an explosion of very competitive pricing,” said Candace Corlett, principal with WSL Strategic Retail in New York.
Black Friday – so named because it was the day when retailers’ budgets moved from red to black – isn’t typically the biggest shopping day of the year. That’s usually the Saturday before Christmas, but retailers view Black Friday as a gauge of how they’ll fare during the season.
“This year retailers are much more worried about retail sales than ever before,” said C. Britt Beemer, chairman of Charleston, S.C.-based America’s Research Group. “You can already see some of them advertising 50 percent off over Thanksgiving weekend.”
Although retail giant Wal- Mart remains confident in its holiday prospects, Target has already warned that it may miss sales targets. Luxury retailers are expected to fare better because their customers are impacted less by economic fluctuations.
Nationally, Ernst & Young LLP’s Consumer Trends Center forecasts an increase of 6 percent for the November and December shopping period. That’s down from 8.3 percent last year.
The International Council of Shopping Centers predicts that holiday sales will increase 3 percent to 3.5 percent, and the National Retail Federation anticipates a 5 percent increase.
Customers last year spent $414 billion during the holiday season, representing nearly 20 percent of 2004 retail sales, according to the National Retail Federation. Discounts are expected to emerge as the strongest themes this season, as retailers hedge their bets and try to capture early sales.
“Consumers may get a surprise when they open their home heating bills in the early part of December,” said Aubie Goldenberg, a partner in Ernst & Young’s retail group. “They may reassess how much disposable income they have at that time, so retailers want to take advantage of the early shoppers.”
A survey by WSL Strategic Retail indicated that 53 percent of holiday shoppers plan to spend less on holiday gifts this year. Nonetheless, local shopping center officials remain confident that shoppers will cast aside their fears and whip out their credit cards.
“We’re always cautiously optimistic,” said Pam Schenck, general manager for Park Meadows mall in Douglas County. “This particular holiday season, I think you’re going to see a resilience.”
Lisa Herzlich, Cherry Creek mall spokeswoman, also has high expectations.
“We’ve had several consecutive months of positive sales growth, and I don’t see any reason to see that change,” she said.
Retail experts are predicting that electronics – especially iPods and iPod accessories – will be among the hottest items.
Gift cards and online retail are also expected to continue gaining market share.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
