Why Black Friday is no longer such a big deal
Black Friday sales have become as much of a holiday tradition as ugly sweaters and pumpkin-spiced caffeinated beverages. And, while the day after Thanksgiving remains one of the top sales days for retailers, its importance is fading as consumers change their behavior.
"It's not the end-all, be-all that it used to be," Brian Yarbrough, a retail analyst with Edward Jones, said of Black Friday. It's "less significant than it has been in the past."
Spending on what's viewed as the start of the holiday season has shifted ahead, with a majority, or 56.6 percent, of consumers having already started their holiday shopping, according to a National Retail Federation survey released Friday. That's up from 54.4 percent in 2014, and 49 percent seven years ago.
A few years ago, some retailers began opening on Thanksgiving night, yielding mixed sentiments from consumers. A survey by mobile shopping application Retale found 54 percent of respondents don't plan on shopping on Thanksgiving, while 46 percent said they would be shopping at stores after celebrating the holiday.
Offering all these bargains carries a steep price, so much so that more than two dozen retailers including Costco (COST) Home Depot (HD), TJX (TJX), the parent of T.J. Maxx and HomeGoods, have announced that they will remain closed on Thanksgiving. According to outplacement firm Challenger, Gray and Christmas, retailers hired 200,000 temporary employees in October, the most ever.
Black Friday is a "punch in the stomach for retailers from a profitability perspective," Dave Bassuk, co-head of the retail practice at the consulting firm AlixPartners, said, citing the high costs of labor, as well as promotions.
Nonetheless, experts expect there to plenty of Black Friday deals in stores and online, which the site Black Friday.com said will be dominated by Walmart (WMT), Target (TGT), Amazon (AMZN), Best Buy (BBY) and Toys R Us, with shoppers expected to flock to those stores for their Black Friday promotions.
That's not good news for shareholders of those companies, according to retail consultant Howard Davidowitz, who predicts this year could see more doorbusters. That's "because business is soft and they have to get rid of inventory," Davidowitz said. "They will have more merchandise to promote."
Macy's (M) is a case in point, with shares of the department store plunging in the wake of disappointing earnings. "We will need to liquidate this inventory in the fourth quarter so that we can maintain the flow of fresh, new merchandise," CEO Terry Lundgren told analysts in a conference call last week.