As Americans pop their turkeys in the oven, retailers are bracing for the start of their biggest weekend of the year. Thursday’s “Black Friday” sales are expected to draw tens of millions of people in search of heavy discounts, and some may head out even before breakfast.
The weekend’s deals start as early as 6 a.m. Thursday when Kmart opens opens its doors for some pre-feast shopping.
Other retailers have early evening openings – Walmart and Best Buy kick off Black Friday sales at 6 p.m., followed by the likes of Macy’s, Target, Kohl’s, JC Penney, and Sears at 8 p.m. That’s an hour earlier than last year, when most retailers opened at 9 p.m.
Due to the timing of the calendar year, retailers lose a week of crucial time to get shoppers to shell out this holiday season. Thanksgiving falls late and there are just four weeks between it and Christmas. Retailers are pushing deals earlier than ever and some even promoted pre-Black Friday sales last weekend.
“All the days are basically blurring,” says Brad Wilson, CEO of BradsDeals.com, a website that aggregates the best of online deals and coupons. “Ultimately, the more important these days get to retailers, the more competitive they have to be to get our attention and the better deals we get.”
Nearly a quarter of shoppers, 33 million people, will head to stores on Thanksgiving Day in search of those deals, according to the National Retail Federation. But Black Friday still reigns as the most popular kick-off to the holiday shopping season. That’s when 97 million people will shop, according to the retail federation.
That’s nearly 70% of those that the federation surveyed for its annual holiday spending poll.
Some people started camping out in front of stores last week. Carmen Thompson, 37, of Louisville, Ky., has been sleeping in a tent outside Best Buy.
“We would not have the Christmases we have if I did not sleep outside,” she says. Thompson, who has seven children ages 2-19, camped out last year too.
“This will become our new family tradition,” she says. “As we get older, all of my children will probably camp out with me.”
The holiday season is the most important time of year for retailers and touts the most opportunities for savings for shoppers. It can account for 20% and up to 40% of a retailer’s annual sales, according to NRF, which expects sales in November and December to be up 3.9% this year.
That’s a marginal increase over last year, when sales increased 3.5%.
And other than heavy post-holiday discounts, the days surrounding Thanksgiving are the best time for consumers to shop, Wilson says.
“It’s absolutely a time for us as consumers to knock off as much of our shopping as possible,” he says. “The game plan for consumers is if you want to go out, try to pick off the best 10 or 20 deals in stores. I’m talking the $ 99 TV at Walmart, the $ 199 iPad mini.” Then head online, where there are more deals and you can shop on your own time.
“Don’t stay at Walmart for six hours and buy a bunch of other stuff,” Wilson says. “That’s where they get you.”
In a competitive retail environment, many stores feel compelled to offer the steepest price cuts and more days to get deals in order to capture shoppers’ dollars. But discount frenzy isn’t necessarily a boon for retailers’ bottom line.
Best Buy executives admitted in an earnings call earlier this month that stores will offer more promotions in the fourth quarter in order to keep up with competition, but that it “will have a negative impact on our gross margin.”
Others say this year’s earlier-than-ever strategy just gets consumers to shop at different times, not spend more. Plus our discount culture has led to sacrificing quality, says Ronald Goodstein, associate professor of marketing at Georgetown University’s McDonough School of Business.
Goodstein says retailers have to negotiate with manufacturers to be able to buy goods that will still make a profit at the sale price, which leads to using cheaper materials. “They’re actually killing quality in order to make money,” he says. Instead of gaining an advantage, “all they’re going to do is be even with each other.”
Stores that embrace multi-channel shopping may be more successful. Nearly 70% of shoppers plan to use their phones to help make purchase decisions during the holidays, according to Deloitte’s annual holiday survey.
The most popular functions include looking up store locations, comparing prices, and researching products, the survey found.
Though many are still reluctant to actually make a purchase through their phone, a separate Deloitte survey out last year on the influence of mobile found that consumers who use their phones while shopping in stores are 14% more likely to make a purchase than those who don’t use their smartphone to shop.
“It’s really this combination of different channels that will help retailers drive more revenue,” says Lisa Gomez, a principle in Deloitte’s retail consulting practice.