Holiday Season Gets Off to Slow Start

Retailers that chose to cut their own Thanksgiving celebrations short by opening on Thursday emerged as the biggest winners over the highly promotional weekend, which saw traffic ebb over the four-day period due a spike in online shopping and earlier start times.

But market watchers remain mixed on expectations for the holiday selling period after the rise in e-commerce sales failed to offset an overall decline in spending amid ongoing concerns about the U.S. economy. 

“This year, Black Friday gave us a taste of what to expect for the remainder of the holiday selling season: intense competition, deep discounts and choppy mall traffic,” said Sterne Agee analyst Sam Poser. “The retailers that opened early on Thursday evening and delivered pronounced messages across various media platforms were the most successful retailers over the weekend.”

Poser noted that the evolving Black Friday shopping experience — featuring social media campaigns and Thanksgiving night start times — resulted in an 11 percent decline in Friday traffic from the same period in 2012, according to the National Retail Federation.

Store traffic on Thanksgiving Day rose 27 percent to 45 million shoppers, compared with the previous year, said the NRA. Store traffic on Black Friday was lower as a result, with traffic rising 3.4 percent to 92 million shoppers. 

Although traffic was higher overall, the total level of store and online spending for the period spanning Thursday through Sunday dropped 2.9 percent to $57.4 billion from a year earlier, according to the retail trade group. The average spend per shopper was also lower, falling 4 percent to $407.02.

According to ShopperTrak, sales grew 2.3 percent on Thursday and Friday to $12.3 billion. 

Also impacting the four-day period was the migration of consumers to bargain hunting online. E-commerce accounted for 42 percent of total sales over the holiday weekend, up from 40 percent a year ago.

Clyde Edwards, a buyer at Miami-based sneaker shop 1973 by Mr. R, said the store experienced strong traffic over the long weekend, with customers lured into the store by heavy discounting and promotional offers, such as 40 percent off the purchase of one pair of shoes. “Nobody does Black Friday anymore — it’s become Black Week,” Edwards said, citing Nike Air Max as the strongest seller. “It was pretty busy. We have snowbirds here from all over the country, traveling away from where it’s cold.”

On the flip side, retailers with products in cold-weather categories, such as boots, outerwear and sneakers, were among the biggest winners from the weekend. That list includes Foot Locker and Finish Line — both of which opened a number of stores at 8 p.m. on Thanksgiving Day — and Ugg Australia, which is slated to present its fall ’14 collection to analysts and retailers this week.

“Sales at Nordstrom and Bloomingdale’s in the Northeast, as well as at independent retailers, appeared to be better than we have seen since 2010, though still not at 2010 levels,” said Sterne Agee analyst Chuck Grom, noting that the season’s colder temperatures after recent years of mild winter weather drove consumers to snap up cold-weather apparel in the Black Friday sales.

Susan Boyle, owner of Brooklyn, N.Y.-based Rime Street Wear, made the decision not to open on Thanksgiving and took a selective approach to her store’s promotional strategy, discounting inventory she wanted to move. “We were really aggressive on certain things. I took my markdowns earlier this year on things I knew I wanted to move quicker,” she said.

Boyle noted Friday traffic was extremely strong, followed by a slower Saturday and then a pickup in customer activity on Sunday. “People were looking for bargains, but they were also looking for specific things,” she said. “When they’re looking for that specific thing, they don’t care what the price is. Anything that was a quick strike did really well.” Outerwear and Timberland and Red Wing boots were among the store’s strongest sellers, according to Boyle.

Chuckies New York owner Richard Erani said that, although the holidays aren’t typically as profitable for his boutique as for more moderately priced stores, the long weekend’s sales were on par with last year.

“We are really at a high price point, [averaging around $700],” Erani said, adding that he also participated in Small Business Saturday with American Express on Nov. 30. “Generally, in terms of a lot of people and selling out of a lot of things, Chuckies has never done that. People are always afraid to give shoes as a gift. That being said, we do have some clients who come in every year to buy high-end gifts, like a $3,000 handbag or a gift certificate.”

Camilo Lyon, an analyst at Canaccord Genuity, said stronger brands — from companies such as Deckers Outdoor Corp., Steven Madden Ltd. and Nike Inc. — prevailed over retailers that used heavy promotions to drive traffic. “Promotions were deep and broad across the mall, particularly among apparel retailers,” Lyon said. “Not surprisingly, we believe athletic retailers Lululemon Athletica Inc., Foot Locker, Finish Line Inc. and Dick’s Sporting Goods Inc., and the brands Under Amour Inc. and Nike, seemed healthier as promotions were shallower and/or narrower.”

Lyon said he expects stronger, more-established brands with an attractive product offering to fare better than retailers forced to extend deep discounts through the holiday season.

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