Credit: Shutterstock photoWill Black Friday take center stage for deal hunters this holiday, after losing its star quality last year?
Retail analysts give the potential performance for the day after Thanksgiving mixed reviews. But they widely expect Black Friday to move back into the spotlight as a big bargain day and strong sales and traffic generator this year.
Industry watchers forecast retail sales for the Black Friday deal period, from Thanksgiving day through Cyber Monday, to be stronger than last year when a cool consumer spending climate led to heated competition and aggressive promotions throughout November, taking the pizzazz out of Black Friday.
Now, with lower gas prices, healthy job growth, and a rising stock market, consumers are in more of a gift-buying mood, leading to prospects for a cheerier holiday season overall and a solid showing on Nov. 28.
Mood For The Mall
Consumer confidence, as measured by both the Conference Board and Thomson Reuters/University of Michigan, rose to a seven-year high in October.
"I actually think Black Friday will do pretty well because consumers are clearly telling us they are waiting and holding out before they buy," said Marshal Cohen, chief industry analyst for the NPD Group. "The pre-Black Friday lull starts now. Why shop today if you know by waiting you will get a great deal anywhere you want on anything?"
Cohen is "optimistic" about the Black Friday selling period, which includes Thanksgiving Thursday, Black Friday, Saturday and Sunday. He expects U.S. retail dollar sales online and in stores for the period to rise between 4.5% and 5% from a year ago. That compares with a 3% gain for the same period last year.
An analysis by industry research outfit IbisWorld, however, sees U.S. retail spending on Black Friday and that weekend as apt to grow just 1.8% to $36.7 billion, with the bulk of weekend buys on Black Friday itself, accounting for $13.1 billion, up 1.6% from a year earlier.
The National Retail Federation expects sales in November and December (ex autos, gas and restaurants) to lift a healthy 4.1% to $616.9 billion, better than 2013's 3.1% gain.
The NRF figures that, including 2014's forecast, holiday sales gains will work out to an average 2.9% a year over the latest decade. It sees this year's holiday receipts accounting for 19.2% of the retail industry's annual sales of $3.2 trillion.
What about the big sale promotions in the week ahead? Retailers have gotten more sophisticated with online marketing and in selecting the merchandise they will feature as deals, which should "allow them to do more business" for the Black Friday period, Cohen says.
Many retailers such asMacy's ( M ), Kohl's ( KSS ),Best Buy ( BBY ) andTarget ( TGT ) will open their stores on Thanksgiving night.
Wal-Mart Stores ( WMT ) will keep its stores open all Thanksgiving Day as it has for years. Black Friday events in stores start at 6 p.m. Thanksgiving night, following deep discounts to be offered online that morning.
Thanksgiving store openings "will invite new customers" to jump on the Black Friday buying bandwagon, Cohen says.
Brian Sozzi, CEO of Belus Capital Advisors, expects Black Friday to be better than last year in terms of sales and margin potential.
With fuel costs lower than last year and wages higher, the "macro environment is supportive of a better holiday season and Black Friday," he says.
Still, Sozzi says there aren't many gift items to really "excite" shoppers other than theApple (AAPL) iPhone 6 and iPhone 6 Plus.
Small leather goods and accessories such as handbags and cellphone cases will be in high demand by bargain hunters, says Cohen.
That trend should bode well for handbag and accessories fashion houses likeKate Spade (KATE) andMichael Kors Holdings (KORS). Cohen says wearable technology products should also be hot. That trend could benefit action-camera makerGoPro (GPRO), an IBD Leaderboard stock, among others.
Sozzi expects companies that have had a strong year to date will also have a strong Black Friday and holiday season. His top picks include highly-ratedNike (NKE),Foot Locker (FL), and Michael Kors.
Still, "retailers sound fearful of Black Friday," says Jharonne Martis, director of consumer research for Thomson Reuters.
She says that in recent earnings reports retailers have cited "mall traffic weakness" as a reason for lowering their full-year guidance.
"They're afraid traffic will be weaker than a year ago," she added. "But analysts' estimates point otherwise, suggesting that retailers will post healthy numbers that are stronger than last year."
Gauging The Spend
Analysts polled by Thomson Reuters expect same-store sales for the fourth-quarter -- which runs from November through January -- to be up 1.6% vs. a year ago compared with a 0.7% gain last year.
Ken Perkins, president of Retail Metrics, says that Black Friday is "diminishing in importance." That's because more and more retailers have moved their store openings into Thanksgiving and are offering pre-Black-Friday sales events, which is "pulling sales out of what was once a really busy day that offered the best deals of the holiday shopping season," he says.
Black Friday will still be a busy day, he says, but not the busiest shopping day of the season.
He expects Dec. 20, the last Saturday before Christmas, to the busiest shopping day of the season with the strongest dollar sales.
Greg Maloney, Retail Americas CEO for commercial real estate firm JLL, concurs that Black Friday "has lost a lot of its pizzazz."
But he expects the Black Friday period -- whenever it starts and finishes -- to be very active.
"Everyone is always looking for deals on Black Friday," he adds.
Maloney expects that this year it's going to be more of a time when shoppers buy -- vs. just scouring stores for the best deals and waiting to buy.
Perkins expects lower gas prices will help spending across the board this holiday because consumers "will have a little extra cash in their pockets."
But he says it should "disproportionately benefit" Wal-Mart's core lower-income consumer. He expects Wal-Mart to be be a "primary destination for consumers" for the Black Friday period.
Wal-Mart is stretching out Black Friday with its "five days of deals" tailored events beginning Thanksgiving morning and lasting through the following Monday.
Perkins expects Best Buy to have a "pretty strong" Black Friday and also a strong Thanksgiving Day opening.
Macy's should also be "strong" and a "primary destination" on Black Friday, he says, as will Victoria's Secret parentL Brands (LB).
What's In Store Is Less
Promotions for the Black Friday buying period are likely to be "flat" with last year, says Perkins, because inventories are below year-ago levels.
"There will be no major 'fire sales' for Black Friday," he says, adding that there will be a lot of merchandise in the 30%-to-50%-off range, but not so much in the 70%-off region.
ComScore forecasts that total U.S. online retail spending for the November--December holiday period will be up 16% from a year earlier to $61 billion.
"Shopping online will continue to drive sales," said Perkins. He adds that the issue for brick-and-mortar retailers is: "They must continue to invest heavily in e-commerce capabilities as they play catch-up and stem the loss of sales to pure-play online retailers."
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
