Black Friday Kicks Off A Long Holiday Shopping Season
November 21, 2012 1:26 p.m.
Miro Copic, SDSU professor, School of Business Administration
Related Story: Black Friday Kicks Off A Long Holiday Shopping Season
CAVANAUGH: After our annual day of giving thanks, comes our annual day of spending money like crazy people. We'll talk about predictions for this year's black Friday, and what the volume of sales might indicate about the state of the nation's economy. My guest, Miro Copic is an SDSU professor at the school of business administration. Welcome back to the program.
COPIC: Thank you, Maureen.
CAVANAUGH: Last year, black Friday brought in cells of more than $52 billion nationally. Do forecasters predict an even bigger sales volume this year?
COPIC: For the entire shopping season, they're predicting about a 4%. For black Friday, they expect probably about the same more a little bit more because it's really the beginning. The year before, black Friday saw a 16% increase in sales. So if it's a fast start to the holiday shopping season, it'll be good news for retailers.
CAVANAUGH: What other factoring is to you that this might be a good black Friday?
COPIC: I think you have some strong employment numbers, some strong consumer confidence over the last few months, retail sales have kind of picked up, and with the election being over, at least there's some relative certainty. If there's news around the fiscal cliff, tell be better news for consumers and businesses alike.
CAVANAUGH: Do headlines like that really impact whether people go out and buy the weekend after Thanksgiving?
COPIC: Subconsciously: The national retail federation did a survey and said will economics play a role in whether you start your season early or whether you buy more or less? And 70% of consumers said the economic circumstances will play a role. So subconsciously it might restrain the amount of spending being done for family, friends. And what retailers are hoping for is a rebound of self-consumption. That impulse purchase, buying for myself while I'm not buying for others.
CAVANAUGH: Something that's making retailers hopeful is that this is a particularly long holiday shopping season.
COPIC: Yes. This shopping season for those who are counting are 32 shopping days till Christmas, which is the longest season since 2007 which was the last strong economic year. So retailers are realize enjoying the fact that there's going to be five shopping weekends before the Christmas holiday.
CAVANAUGH: And that weekend before, Christmas is on a Tuesday, I think?
COPIC: Yeah, the holiday I think is Tuesday, and the 22nd, 23rd is that Sunday.
CAVANAUGH: That last weekend.
COPIC: Big shopping crowds. They'll expect that to be probably the top shopping weekend of the season.
CAVANAUGH: What is it that shoppers are looking for on black Friday?
COPIC: It all varies, but it's really they're obviously looking for great deals, they're looking for consumer electronics and gadgets, toys are a big part of the shopping season this season. And for self-consumption, it ends up being clothes, handbags, accessories, things like that. But electronics are going to be the big news because you have the new windows 8 platform on the PC front, the iPad Mini that was launched by apple. There's a big shift with consumers to smart phones and tablets, so they're replacing or adding to their PCs at home with these dayses. So it's going to be a lot of traffic in the malls and electronics retailers.
CAVANAUGH: I am one of these people who would like to be anywhere else in the world besides a mall on the day after Thanksgiving. And I have a feeling that I am not alone. So could you explain what it is like are there continual sales? Are there things that are rolled out hour after hour after hour at various stores?
COPIC: Yeah. What retailers are looking for, they really want to make -- if they're getting you up at 3:00 AM, they want to not only have a compelling deal but to make your experience interesting, fun, a little bit of an adventure. So a lot of the retailers will literal lie have special deals every hour that aren't announced in the paper. While you're in the store, there are going to be specials that you can go and see, and they really do it from when they open at 3:00 AM or 4:00 AM depending on the retailer until about noon or 1:00. So the black Friday, the real day where all this activity takes place is from the early hours in the morning to noon or 1:00.
CAVANAUGH: And that's to keep you hanging around?
COPIC: Exactly. They'd rather you stay in a Macy's or target and continue to shop around rather than go somewhere else and buy that next item that you could still get at that retailer.
CAVANAUGH: Black Friday got its name when accounts enter the black for retailers and profits start to be made. Is it really that crucial even today?
COPIC: Yes. Because like you said, black Friday is going to -- that weekend, from actually including Thursday.
CAVANAUGH: We'll talk about that.
[ LAUGHTER ]
COPIC: Through Sunday, and you could even include Monday, but that $52 billion being projected is going to represent just under 10% of all holiday sales. So it is a critical time for retailers to really meet their numbers.
CAVANAUGH: How about for small retailers?
COPIC: Small retailers are getting a big shot in the arm. Saturday actually is the second largest shopping day of the black Friday weekend. About if I have million consumers will be out in force. American Express has really in the last couple years supported this small business Saturday concept which allows consumers to enjoy the main street businesses, the small businesses that have very individualistic sets of products, and they're really encouraging them to go and see what's going on in the small business in the community rather than just going to the mall.
CAVANAUGH: And I suppose it's even more crucial this weekend to the small businesses themselves than it might be to the big box stores.
COPIC: On a relative basis, the small businesses really need a day focused on them or else they tend to get lost. With malls being such focal places with so many retailers in one location, it's easier for a consumer to go and see a variety of businesses. So the small up and down the street businesses really need this kind of attention. And this is the right time to do it. Saturday is an easier day than even Friday. Some people just skip Friday all together because of the insanity of black Friday.
CAVANAUGH: I'm not alone then!
[ LAUGHTER ]
CAVANAUGH: Now, you mentioned a couple of times that people are expected to go out and buy for themselves as well as for other people. Is that especially true this year? The idea that there's some sort of pent up demand of people, you know, sort of sacrificing themselves during the holiday, now it's time to treat myself?
COPIC: They were expecting that last year. And it did materialize a little bit, and they're hoping it's going to be a little bit more this year. If you noted on the -- you know, in the news reports for Thanksgiving travel, people are kind of holding back on the amount they spend on Thanksgiving travel this year, and I think what they're doing is trying to save some of that extra money and put it toward their holiday shopping.
TINSKY: See. What are some of the big hot items this season? Electronics?
COPIC: Electronics are always a big category. The important thing with electronics is The winds 8 platform, this is going to be very important for Microsoft. This is kind of a make or break moment for them. A lot of manufacturers are supporting it. Microsoft has its own tablet they're manufacturing themselves. So it's a big thing for both Microsoft and the PC make are this is holiday season. Apple obviously with an iPad mini-trying to get a reduced price to compete more with the Samsungs and the other tablet manufacturers like the Kindle. Toys are a big plus. Frankly, I wish I knew the hot toy this season! But it is that short window.
CAVANAUGH: Let's talk about cyber Monday. There's a twist to it this year, at least when it comes to places like Amazon. Cyber Monday, the traditional Monday where people go back to work and buy at their desks or something, and there are all these deals on the Internet from Internet suppliers. But this year, Internet businesses like Amazon faced more competition from traditional stores because of a sales tax, right?
COPIC: Right. And September there was -- the State of California in particular started Amazon to collect California state taxes, with previous legislation that was signed by Governor Brown in the summer of 2011. Now that that 77.5% sales tax is not an advantage that Amazon has, the Internet-only retailers in the state, they're going to offer -- they're going to look at a lot more interesting deals. You're going to see free shipping. Online retailers have backed off a little bit on free shipping unless you buy a certain amount. Usually that minimum amount is reduced substantially on cyber Monday to drive the sales. So free shipping is going to be a critical part of that day. And similar to what we just discussed about the traditional retailers on black Friday doing specialless every hour, online retailers do the same thing. And they do it all day. So from the comfort of your home or office, you can track to see what's exciting and new at Amazon.com or zappos or whatever online retailer you prefer.
CAVANAUGH: I want to talk about the drove that's happening this year about some stores opening not at midnight, not at 3:00 AM, not early the next day. I remember those old commercials, open, open, open! They're going to be open on Thanksgiving!
COPIC: On Thanksgiving. Yes. It's one of the last major holidays that retailers have not hit. So you have Easter or Christmas or new year's day, and Thanksgiving. Those are the four holidays where retailers stayed close. Last year they put their toe in the water. Sears and K-mart, same parent company, and the Gap stores were open on Thanksgiving day, different hours. This year, they saw there was success. Out of the 226 million people who went to the malls on black Friday weekend, 30 million of them went on Thanksgiving day. And that's for stores that opened in some cases at 8:00 PM or 9:00 PM. After your Thanksgiving meal. But K-mart is open from 6:00 AM to 4:00 PM tomorrow, and then they close for the Thanksgiving meal, reopen at 8:00, and stay open all the way through black Friday throughout the day. The Gap stores, Banana republic, and Old Navy, one opens at 10:00, 11:00, and noon, and they stay open until about 7:00 PM. So within the mall, there's going to be other retailers open as well.
CAVANAUGH: Do you think there's going to be any pushback on that? It is sort of -- Thanksgiving was sacrosanct for a long time. Just about everybody had the day off. I worked in radio for many years, so we didn't always. But most people had the day off, and now it's become -- it's looking like it's trending toward becoming just another shopping day.
COPIC: You know, there are a lot of retailers who are still kind of waiting and seeing. 30 million people going to the mall on Thanksgiving is a lot. And I think there will be a little bit of a backlash. Most are being conservative. They're playing around with the after-dinner, some will open at midnight. They're all testing the waters. And there's not enough critical mass where there could be organized consumer outcries. So instead of going to a movie after Thanksgiving, the studios might be a little disappointed they're going to go to the mall and do shopping instead. If they stay open 8:00 and after, the consumer repercussion will be minimal. If it becomes another day, you will definitely hear groups complain that it's breaking down traditions.
CAVANAUGH: I want to move away from black Friday for my last question to you. And just ask about what potential downside might be for this very long holiday season? Is there a time between black Friday and December 24th where retailers generally see their sales slump?
COPIC: Yes. Oh, that's a great yes. Yes, they do. And it's really between December 1st and the 15th. And with an extra long holiday season, depending on if consumers find the things they're looking for this weekend and there's big momentum, between the first and the 15th, it kind of slows down. And it frightens retailers because often they're open until 10:00 or 11:00 at night, they have extended hours, and they're not seeing the traffic. So that's the window that a lot of retailers and observers are going to be looking to to see if it's going to finish strong. If it stays consistent or more than the traditional dip, it'll portend well for the season.
CAVANAUGH: Terrific. Thank you for all this information.
COPIC: You're very welcome. Thank you.
CAVANAUGH: I've been speaking with Miro Copic, SDSU professor at the school of balance administration, and happy Thanksgiving to you.
COPIC: Thank you. Happy Thanksgiving to you as well.