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Black Friday has gone from a one-day event to a month-long parade of promotions this year, as retailers are making a dash for early holiday cash.
Strategies include high profile discounting efforts by Wal-Mart Stores Inc. that have stirred online price wars for books and DVD’s. More subdued efforts include Kohl’s Corp. this year having more items with deeper discounts in the flyer for its annual pre-Christmas sale that began Wednesday, along with displaying prices much more prominently in stores than it has in the past.
The tactics stem from consumers being on tight budgets and retailers wanting to capture those dollars as quickly as possible. Retailers want to avoid a repeat of last Christmas when many were compelled to slice prices very aggressively just ahead of the holidays and continue deep and margin-crushing discounts into the new year because they had misjudged how deeply the recession was goring consumers.
“The promotions will come earlier this year and from more retailers,” said Al Ferrara, director of the retail service at BDO Seidman, which recently surveyed more than 100 retail chief marketing officers about their holiday plans.
Average holiday spending this year will be around $682.74, off 3% from $705.01 last year, the National Retail Federation predicts.
“We see a lot of retailers looking at what happened last year and they are starting to roll out their Black Friday promotions earlier,” said John Squire, chief strategy officer for Coremetics, which gathers information about consumers’ online behavior for retailers including Macy’s Inc., J.C. Penney Co., Costco Wholesale Corp. and Abercrombie & Fitch Co.
“There is a certain amount of cash and retailers want to strike early while it is still there,” Squire said.
Because consumers have come to take big discounting for granted, retailers will have to be generous. “There has to be a sale sign; there has to be a markdown,” Ferrara said.
Black Friday itself will still be as promotional as usual, with retailers bringing in so-called door-busters, like limited numbers of very low-priced TVs or highly discounted apparel, to get customers excited.
But moves taken now could help mitigate last minute panic — not by shoppers, but by retailers who could, even with their slimmed down inventories, end up overstocked once the holidays end if customers don’t turn out.
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Real Time Economics offers exclusive news, analysis and commentary on the economy, Federal Reserve policy and economics. The Wall Street Journal's Phil Izzo and Sudeep Reddy are the lead writers, with contributions from other Journal reporters and editors. Send news items, comments and questions to realtimeeconomics@wsj.com. Read more Economics coverage.
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