Super Committee Failure to Darken Black Friday Sales?

New York—With retailers poised for what promises to be one of the most competitive Black Friday weekends ever, could news of an impasse in the Congressional super committee dampen consumers’ spirits at this crucial time?

The super committee is expected to announce today that it failed to achieve $1.2 trillion in spending cuts prior to a Wednesday deadline. For weeks, economists, retail analysts and others have warned that such a failure, which would force automatic budget cuts in January 2013, could adversely affect the stock market, the country’s credit rating and even consumer spending.

When the NPD Group, Inc. conducted its consumers’ holiday spending intention survey, the research company asked consumers if the state of the economy would have an impact on their holiday spending. Nearly 81% said the economy would have an effect on their spending, an increase from 78% who said that in 2009.

“This year it won’t be the Grinch that will steal Christmas but it might be the government that does,” said Marshal Cohen, chief industry analyst, The NPD Group, Inc., “With the Federal Budget deadline looming, consumers may just be distracted right out of the ‘spirit of giving’ for holiday. The timing can’t be any worse, with the deadline falling just prior to the early Black Friday sales.”

Black Friday, Nov. 24, is traditionally known as the single best day to get the greatest in-store deals resulting in hectic, middle-of-the-night mad rushes to stores. Last year, an estimated 212 million shoppers bought gifts and other items the weekend of Black Friday spending on average $365.34.

The NPD found that 17% of consumers said they planned to start their holiday shopping this weekend, up from 12% who said that last year. Retailers have responded with even earlier hours and by offering doorbuster-style deals online before Black Friday and throughout the weekend until Cyber Monday, Nov. 28.

New Black Friday Traditions

“This year we are seeing more stores with extended hours and it seems they are all trying to beat each other by opening earlier and earlier this year,” noted Cohen.

“Retailers have recognized that there is a need for a new tradition. They have to realize that they are competing in the 21st century and have to compete with other brick and mortar outlets but with online retail as well,” Cohen said. “In order to compete with the comfort and convenience of the online shopping experience, the brick and mortar retailers have to generate excitement. They also have to remind consumers that they can come into the stores to see, to touch, and to feel the products as well as get the instant gratification of walking out with their gifts in their hands.”

Despite the super committee’s failure, consumers have been feeling the pinch especially in the last few months as inflation; slumping housing market and high unemployment have weighed on consumer confidence.

“Does this mean that the future is bleak and this year’s holiday season is going to be a bust? No,” said Casey Chroust, executive vice president of retail operations at Retail Industry Leaders Association (RILA).

“It means that there are fluctuating variables present in 2011 and no matter what the predictions floating around are; the reality is the outcome is anybody’s guess with many predicting a slight increase over last year.”

Chroust said that retailers have responded by promoting early—and often—and beefing up perks such as free shipping, layaway programs and faster check outs. And successful ones will be attacking consumers on all fronts: in store, online, Sunday circulars, mobile, email and social media.

“Retailers are also being smart about their operational strategies, keeping inventory levels balanced do they are not stuck with excess product at the end of the year, making sure they have the top products available for consumers and streamlining their supply chain processes to maximize performance,” Chroust added.

Regardless of all these efforts, many retail executives apparently don’t expect Black Friday to be a holiday home run.

According to a survey of 100 top retail executives, conducted by BDO USA, Black Friday is expected to account only for a mere 1.6% of total sales. Last year, the same survey projected a 3.8% increase.

 

 

 

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