Black Friday Retail Strategy Backfires

Friday, 28 Dec 2012 08:04 AM

By Michael Kling

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Retailers’ new Black Friday strategy of opening on Thanksgiving in the hopes of boosting their holiday sales has instead backfired.

"Early store openings for Black Friday only shifted the holiday consumption pool, which was the opposite of the intended effect," Brian Sozzi, chief equities analyst at NBG Productions, wrote in a note to clients, according to Business Insider.

"Retailers wanted early buying to lead to splurge buys towards the end of the season. The thought they hoped to trigger: 'man, did I REALLY get everyone enough?'”

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

Retailers posted worse-than-expected holiday sales — a 0.7 percent increase, the weakest increase since 2008.

The Wall Street Journal, calling expanding Black Friday hours an “arms race,” said stores could use some detente.

“The holiday shopping season is basically a zero sum game: People spend what they are going to spend,” The Journal stated.

“What retailers are doing with tactics like opening ever earlier on Thanksgiving, then, is fighting for a bigger share of holiday spending, as opposed to making the pie bigger.”

The Thanksgiving hours may have contributed to a lull in sales in early December, International Council of Shopping Centers economist Michael Niemira told the paper.

The shift may have only increased costs for retailers who had paid employees to work on Thanksgiving. And those costs will rise as holiday hours expand and the employment rate drops, making finding people willing to work on the holiday more difficult.

Retailers started the Black Friday arms race to improve sales figures for investors, according to The Journal. Yet the strategy will ultimately only shrink their profit margins, making them less attractive.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

© 2014 Moneynews. All rights reserved.

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