[NYTr] Black Friday or Bleak Friday: Retailers in Desperation

[All the News That Doesn't Fit]

[And yet they still buy... WHY?]

The New York Times - Nov 23, 2007
http://www.nytimes.com/2007/11/23/business/shopWEB.html

Retail Desperation on Display in Early Hours

By MICHAEL BARBARO

Bleary-eyed shoppers descended on suburban malls and downtown shopping
centers across the country this morning in an annual retail ritual that
appeared to break records for consumer sleep deprivation.

Several major chains, like J.C. Penney and Kohl’s, opened at 4 a.m., an
hour earlier than last year, dangling half-price discounts and coupons
offering $10 off to lure customers out of bed.

Most discount chains, like Wal-Mart, Best Buy, Circuit City, Target,
Toys R Us and Sears, opened at 5 a.m., with department stores such as
Macy’s waiting until 6 a.m. and Saks Fifth Avenue holding off until 7
a.m. 

The extreme hours highlight how desperate stores are to win over
consumers this holiday season, which is expected to be the weakest in
five years because of rising energy prices, falling home values and a
tight credit market.

“The gloves are off,” said John D. Morris, a retail analyst at Wachovia
Securities. “Stores are using every weapon they can to reach consumers.”

Already, analysts have christened this the “trade down” holiday season,
because higher-end labels like Ralph Lauren, Nordstrom and Coach are
warning of a falloff in business as customers flock to budget brands.

Donna Lhopitault, 38, stood in line at the Toys R Us in Times Square
for four hours this morning to secure a deeply discounted Nintendo Wii
video game system for $250 — more than half the price she has seen it
online.

In the past, Ms. Lhopitault, a financial adviser with two kids, has
splurged at high-end stores like FAO Schwarz. “But this year, I am
sticking with Best Buy, Toys R Us and Target,” she said. “That’s where
the deals are.”

Bill Dreher, an analyst Deutsche Bank Securities said “the economic
slowdown is gravitating up the economic chain. People are cheaping out
and sticking with the essentials.”

And they are looking for bargains.

Technology buffs skipped Thanksgiving dinner and began lining up
outside CompUSA stores at 5 p.m. last night to secure deeply discounted
hard drives, GPS navigation systems and flat-screen televisions.

At the CompUSA at Fifth Avenue and 37th Street in Manhattan, store
staff handed out individual pumpkin pies, served on red paper plates,
to compensate for missed Thanksgiving desserts. As the clock struck 9
p.m., the doors flung open and hundreds of shoppers dashed inside,
ransacking displays and overwhelming the staff. Fifteen minutes later,
the employees began delivering the bad news: the best deals had sold
out.

“No more GPS, sorry,” said one manager. “Those laptops are gone,”
yelled another.

Exasperated consumers left the store in anger. “They are toying with
the public,” said Syed Sha, 52, who drove to the store two hours before
it opened to buy a Sony laptop — regularly $800, on sale for $549 — for
his college-age son.

“ I called ahead and they told me they had at least 14 in the store,”
he said. “How could they sell out?”

The shortages appeared to create a business opportunity for a lucky
few. The first customers in line received vouchers that promised steep
savings on products like a Magellan Maestro portable GPS system— a
voucher that could, hypothetically, be auctioned off to another shopper.

“You want the GPS?” asked one young man in the store at 9:30 p.m. “I
have the voucher. But you have to give me $20 for it.”

The importance of the day after Thanksgiving — known as Black Friday —
within the holiday season is expected to be bigger than usual because
shoppers are so cost-conscious.

“The customer has been holding back and waiting,” the chief executive
of Toys R Us, Gerald L. Storch said in an interview from atop the Times
Square store. “There is a lot of uncertainty out there.”

Mr. Storch, sitting before a computer that calculated sales from Toys R
Us stores around the country beginning at 5 a.m., said lines were
unusually long this morning. “They are bigger than last year, for sure.”

An aggressive marketing campaign might explain why. The chain
advertised 101 doorbuster discounts, four times as many as last year.

Copyright 2007 The New York Times Company