Tuesday, December 1, 2009

Black Friday / Cyber Monday

So Black Friday and Cyber Monday are past…  How’d retailers fare?  I was reading WWD today and they painted the picture of a positive weekend.  Of course they do have a vested interest of seeing things through rose-colored glasses, but I think a lot of it is unbiased and true.  Pete Nordstrom, president of Merchandising for Nordstrom said, “There is more traffic in stores.  People are more upbeat and we are getting back to the normal rhythm of business.”  Micheal Celestino, executive VP of store operations at Barney’s commented that he was “encouraged by traffic in stores over the weekend.”  Henri Barguirdijian (quite an intimidating last name, isn’t it), President and CEO of Graff, summarized it probably most appropriately by explaining, “A year ago, we were right in the middle of a tornado.  This year we feel so much more upbeat.”

Consumers still are heavily gravitating toward retailers who offered sales (duh) but also people tended to focus on doorbuster specials.  You know, the Wal-Mart business model: advertise a flatscreen TV for something like $15.34 to the point that Wal-Mart actually loses money when people buy it but the traffic that item generates more than makes up for the loss on that one item when people buy other things while there at normal profit margins.

Liz Gillespie commented that “fifty-four percent of Old Navy’s sales (on Friday) were featured items in their sales flyer.”  While I appreciate optimism as much as the next person, I think that consumers are just more disciplined with their money.  There was “little impulse buying” and it was “a little lackluster” according to Retail Eye Partners consulting firm. 

Marshall Cohen of NPD Group provided a really insightful, yet so basic and fundamental thought: “Retailers are not going to look back on Black Friday this year to see how busy it was.  They’ll look to see how profitable it was.”  Yes, what good is 100,000 hits on your retail website if only 1% is converted into a sale?  Who wouldn’t take 10,000 focused hits with a 20% conversion?  Twice the cash.  The same goes with brick-and-mortar stores.  People are in business to make sales FIRST, not to get people talking or thinking about buying something, someday.  Of course, being too pushy or aggressive is bad but that’s the value a well-calibrated salesman on the floor provides to a company. 

When I worked at Banana Republic as a salesman when I was 16 (strangely enough at the time, you had to be 18 to work at Gap and Old Navy), one metric they measured was the percentage of people that come into the store against the number that bought something and the average transaction value.  Banana Republic is a very well run company and I would imagine they are fairing very well for measuring and monitoring this so tightly.

Random fact that made me laugh out load as I was reading about this on the train this morning: There were “big spikes on the Internet (retailers) before and after Thanksgiving dinner… that used to be taboo.”

As happens every year, there was a big sales boost in the past few days after Thanksgiving.  Here’s a picture I took at the Kenwood Towne Centre while visiting Cincinnati:

Will the Black Friday boost this year be comparable with the government Cash-For-Clunkers program?

Image provided by The Oil Drum 

Will we see a big boost in sales one week followed by a plunge the next of people who just fast-forwarded a purchase they were already planning on making.  As Standard & Poor's equity analyst Efraim Levy said of Ford, “we see some cannibalizing of '10 sales.”  Or will people that went shopping last weekend make multiple trips this holiday season?  I’m excited to see what happens and learn from it :)

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