The retail business has been described in recent times as Darwinian in nature to those in the industry, meaning formats come and go as competition intensifies each year.
That concept is apparent in retail chains having trouble finding the best real estate for new locations as antiquated strip centers retain high vacancies. Or in the resurgence of upscale retailers, while dollar stores are simultaneously expanding at a rapid clip.
Black Friday shoppers go over their shopping strategy outside of a Target store – a scene that plays out in cities across America on the unofficial start to the holiday retail season. The onslaught of shoppers has prompted stores to open earlier on Thanksgiving night. “If you’re a retailer and you know that 40 percent of your sales are coming in less than a 30-day period, it makes sense to extend every hour that you possibly can,” said Danny Buring, partner with The Shopping Center Group LLC.
(AP Photo / The Roanoke Times, Matt Gentry)
The variables surrounding this year’s holiday sales season are poised to promise similar extremes. Many brick-and-mortar retailers continue to lose ground as Internet sales escalate. And in a desperate effort to increase market share, a slew of big-box stores are jumpstarting the Black Friday frenzy even sooner than last year by opening their doors on Thanksgiving at 9 p.m. or earlier.
“If you’re a retailer and you know that 40 percent of your sales are coming in less than a 30-day period, it makes sense to extend every hour that you possibly can,” said Danny Buring, partner with The Shopping Center Group LLC. “Unfortunately, I think we’ll continue to see more and more Internet-based shopping becoming a bigger part.”
Setting a new high, the National Retail Federation estimates 51.8 percent of shoppers to go online for gifts and other items this holiday season, up from 46.7 percent last year.
And that uptick in online retail is concerning for the big wave of traditional consumption that is Black Friday, said Craig Dismuke, chief economic strategist for Vining Sparks IBG LP.
“Online retailers are growing their market share pretty rapidly,” Dismuke said. “That’s a bigger risk to Black Friday than moving the time up. Growth in consumption hasn’t been significant enough to fuel organic growth for the retailers.”
Overall, the federation forecasts 2012 holiday sales to improve 4.1 percent to $586.1 billion, a modest prediction based on still-prevalent economic hesitations combined with notable upticks in consumer confidence. The average shopper is expected to shell out $749.51 on gifts, décor, greeting cards and the like compared to the $740.57 spent in 2011.
“I think most of the economic news headed into this Christmas season has been positive,” said Dr. John Gnuschke, director of the Sparks Bureau of Business and Economic Research and co-director of Center for Real Estate Research at the University of Memphis.
“We obviously wish that unemployment rates were lower than they are, but in fact they’re getting there slowly but surely. And we wish that people had more income to spend, which is always a problem for retail sales. But the downward trend has been reversed, economic growth is more positive than it has been and I think it’ll continue to be that way in 2013.”
Gnuschke said a major boon to families this holiday season is the decline in fuel prices. The cost at the pump in Tennessee and in Memphis are costing travelers about a dime less than a year ago, according to the research from AAA and GasBuddy.
“It’s like a tax cut, it increases your disposable income,” Gnuschke said. “It’s your Christmastime bonus, and for many people that may be the only bonus they get. It’s a stimulus to the local economy and it’s a stimulus to retail sales, so amen for that.”
Meanwhile, Oak Court Mall and Wolfchase Galleria are doing everything in their power to drive traffic into the Simon Property Group-owned malls, from social media promotions to pet photos with Santa and a $10,000 shopping spree giveaway. What’s more, both properties are requiring all stores to be open at midnight for the first time, said Lexi Harris, area director of marketing and business development.
“We keep bringing in new and unique events to interest our shoppers,” Harris said. “Black Friday in particular, we try to do snacks and coffee for our midnight shoppers, and then we’re planning on doing donuts and coffee later on in the evening, as well as holiday entertainment throughout the day. We’re also planning on giving out goodie bags for the first 100 shoppers at both properties, just to have a more unusual and fun thing to do when they get there, to make it more exciting.”
Indeed, differentiation – whether it’s a point of view, service or selection – is gaining momentum in influencing consumer purchase decisions. According to ChainLinks Retail Forecast Report, those retailers that make shopping more of an entertainment experience will prevail.
Shoppers look at TVs displayed at a Best Buy. Despite the anticipation of Black Friday, retail analysts have a mixed forecast for this year’s shopping season.
(AP Photo/Mark Humphrey)
It’s an art form that Outdoors Inc. has perfected over its 39 years in business. The fourth quarter is the Memphis-based specialty retailers’ most important time of the year, partially because of the weather change.
“There’s a lot of competition out there,” said Joe Royer, co-owner of Outdoors. “There are a lot of places you can buy a bike or a fleece jacket. What we try to do is fit and service it. We take it very seriously.”
And Outdoors isn’t just building loyal customers in stores but on the Internet. It’s not alone – Practical eCommerce attributes the fastest growing segment of new online businesses to be local brick-and-mortar stores migrating online.
“We’ve got customers in Japan and Switzerland that have ordered many times from us,” Royer said. “It took us a long time to figure that out because running a website is not anything close to running a brick-and-mortar store. It’s really important you ship it on time, that it’s packed properly, charge the charge card properly, return (protocol) – that’s your customer service.”
Conversely, new-to-the Memphis market Essex Bargain Hunt doesn’t have an online store. But that hasn’t stopped the value retailer’s 5124 Summer Ave. superstore from consistently ranking in the top two slots company-wide since its opening this summer.
“Really, kind of our marketing this year is it’s Black Friday everyday at Bargain Hunt,” said store manager Dustin Spielman. “We have such great deals that we don’t have a problem with that at all.”
All in all, retailers this year have a better idea of what they’re going to sell and not going to sell, Buring said.
“The issues these past couple of years, a lot of retailers were holding their breath in saying, ‘We’re not going to stock everything we were dumping onto the shelves’ because in 2008 or 2009, they were burned with a ton of merchandise that they didn’t sell,” Buring said. “I think we’re going to see less of that this year because retailers are more comfortable, versus trying to keep it lean and mean.”
To that end, brick-and-mortar retailers will see a slight improvement in fourth quarter numbers, Dismuke said, but it’s not “going to be a blockbuster year per say.”