- Front Page
- Biz Tools
The Franchise Owner's most trusted news source
LEXINGTON — During Black Friday weekend more shoppers lined up earlier, spending more for Christmas deals than ever before. The promotional period was longer with this year's Black Friday, Small Business Saturday and Cyber Monday.
Franchises are heavily involved in retail sales. On Friday Radio Shack stores offered an extended assortment of free cell phones to attract Christmas shoppers. Auto franchisees advocated skipping the mall and heading to the car dealership for an end of year special. (Time magazine debated which day of the year was actually the best for a car deal. Conclusion? Uncertain. ) With hundreds of franchises offering children's clothes and accesories, Gymboree offered 25% discounts on everything (see their online ad to the right). The chain is trying to raise its same-store sales, which has seen only a 2 percent rise in its third quarter (WSJ $$). 4,800 franchised Ace Hardware stores offered heavy discounts on select items, while highlighting other seasonable buys, like Christmas lights. Doughnut chain Tim Hortons enlisted "Holiday Helpers" to distribute coupons for free coffee and doughnuts to shoppers. Chilli's restaurants rolled out holiday specials.
The shopping mood feels good, but exactly how good?
Stores opened earlier this year. That helped boost retail sales on Black Friday weekend.
ShopperTrak: With 40,000 data collection devices in retail shops, ShopperTrak announced on Saturday that Black Friday sales increased 6.6 percent over the same day last year. The provider of retail intelligence said that Black Friday had seen $11.40 billion in retail purchases and the biggest dollar amount ever spent during the day. Retail foot-traffic rose accordingly, increasing by 5.1 percent over Black Friday 2010.
"Black Friday is the biggest shopping day of the year and the traditional start to the holiday shopping season," said ShopperTrak founder Bill Martin "Despite our sluggish economy, shoppers proved they are looking for value and ready to buy if given a good customer experience."
"This is the largest year-over-year gain in ShopperTrak's National Retail Sales Estimate for Black Friday since the 8.3 percent increase we saw between 2007 and 2006," stated Martin. He cautioned: "Still, it's just one day. It remains to be seen whether consumers will sustain this behavior through the holiday shopping season. "
NRF: The National Retail Federation announced on Sunday that 86.3 million shopped in stores and online Black Friday alone. It's sponsored survey showed a record 226 million shoppers visited stores and websites over Black Friday weekend, up from 212 million last year. Their survey says that the average holiday shopper spent $398.62 this weekend, up 16 percent from last year. Total spending reached an estimated $52.4 billion. Additionally, shoppers also checked out retailers' deals online, spending an average of $150.53 on the web – 37.8 percent of their total weekend spending.
"Stuffed to the brim from their holiday meals and eager to shop, more consumers than ever turned out for retailers' Black Friday promotions, a promising sign for the economic recovery," said NRF CEO Matthew Shay. Shay was formerly the CEO of the International Franchise Association, an advocacy group for companies that issue franchise licenses. "After an historic holiday weekend, retailers know the holiday season is far from over and will continue to look for ways to excite holiday shoppers and build on the momentum we've seen thus far."
ICSC: Retail sale results for the entire week, not just Black Friday, ending November 26, 2011, rose by a solid 1.7 percent, according to International Council of Shopping Centers (ICSC) and Goldman Sachs Weekly Chain Store Sales Index. On a year-over-year basis, retail sales rose sharply by 4.0 percent, the strongest gain since July 30, 2011. The ICSC's index is constructed as a sales-weighted geometric average growth rate to preserve long-term consistency and is statistically benchmarked to a broad-based monthly retail industry sales aggregate that currently represents approximately 40 retail chain stores, which also is compiled by ICSC.
"Holiday shopping is certainly in full swing as consumers took advantage of retailers' extended shopping hours and Black Friday promotions this past week," said Michael Niemira, ICSC vice president of research and chief economist."
The International Council of Shopping Centers expects that comp-store sales for November will increase between 3.5 to 4.0 percent when retailers report their November retail sales numbers on Thursday, December 1, 2011.
Restaurants: Nation's Restaurant News observes that this holiday season looks promising to restaurateurs. NRN's Charlie Duer reports: "Although most restaurants typically don't generate a disproportionate percentage of annual sales during the fourth-quarter holiday season — typically around 27 percent of full year sales, according to analysts at Barclays Capital — this year chains across all segments are expecting to see a boost in sales."
Auto franchises: It's not just retail shops. Automotive News reports that November's auto sales are expected to grow eight percent from 2010's figure.
E-commerce: Comscore said that online retailers had seen their Black Friday sales grow by 26 percent, rising from $648 million in 2010 to $816 this year. "Despite some analysts' predictions that the flurry of brick-and-mortar retailers opening their doors early for Black Friday would pull dollars from online retail, we still saw a banner day for e-commerce with more than $800 million in spending," said comScore chairman, Gian Fulgoni.
Not so fast, writes The Streets reporter Janine Poggi on why readers shouldn't listen to Black Friday data. "As usual the reports are overly optimistic. But if history is any indication, preliminary data points don't paint an accurate picture of the total holiday season," she wrote on Monday.
The Street continues: "NRF and ShopperTrak reports are interesting data points, but do not correspond well with ultimate outcomes for the holiday season," Goldman Sachs analyst Matthew Fasslet wrote in a note. "We are grateful that multiple third-parties provide color on Black Friday sales, but the reality is that few of these metrics align well with actual outcomes for the overall holiday season."
The analyst thinks that core retail sales of January through October sales are a better indicator because it tends to match November and December sales. The street again quotes Goldman Sach's Fassler: "Core' retail sales growth in November and December typically tracks in-line with growth posted in the January [to] October time frame," Fassler wrote. "Over the past 10 years, excluding the years impacted by the financial crisis (2008-2009), the average gap between these two growth measures was 0.1%, with a standard deviation of 1% and the largest gap at 1.8 percentage points in 2000."
Although that may normally be the case, this year may be somewhat different because of the lowering of real growth by inflation, according to the International Council of Shopping Centers. January through October 2011 retail sales volume was up 5.1%, according to figures produced by the International Council of Shopping Centers and Goldman Sachs. The Council's economist anticipates growth somewhere between 3 to 3.5 percent for November to December. That is solid growth but he notes that that rate is slightly lower than 2010's 3.8% growth for the same period over 2009's retail sales volume.
Not everything is so rosy, hotels: Hotel franchise owners aren't as optimistic. Tim Hart, executive vice president of business intelligence for Travelclick, tells Lodging Hospitality magazine that his hospitality data shows although travel is up this year, the additional travelers won't be staying in hotels, but those that do will be paying a higher rate. "It's obviously a very transient heavy period for these days," Hart says of the long weekend. "Occupancy is lagging a little and looks like last year, but ADR is improving. (Thanksgiving) isn't really a huge hotel weekend." Travelclick reports committed occupancy is up 0.3% from a year ago and average daily rate is up 4.7%.
As the season of good tidings begins, Black Friday was dark not just in bringing retailers from a red loss to a black gain. But unfortunately, Black Friday also brought on some dark violence at Big Box retailers. At the big box discount outlet in Los Angeles, a woman fired pepper spray at 20 shoppers to clear room for her to grab a discounted Xbox video game. Outside a San Leandro, California-Walmart, a robber shot a shopper for not giving up his discounted Christmas items. A boy was trampled and his grandfather bloodied by police at a Phoenix Walmart. A man with a heart condition collapsed on the floor while shoppers ignored him in a Charleston, West Virginia Target department store. He died.
Continuing the momentum from 2010, the appetite for shoppers to get a head start on Black Friday continued, as nearly one-quarter (24.4%) of Black Friday shoppers were at the stores by midnight on Black Friday, either waiting for stores to open or visiting retailers who opened on Thanksgiving evening. By comparison, the number of people who were at the stores at midnight was 9.5 percent in 2010 and 3.3 percent in 2009.
"The appetite for these early openings is only getting stronger among holiday shoppers, and retailers did a great job providing Americans just what they wanted this weekend – the ability to shop on Black Friday without having to get out of bed before dawn," said BIGresearch Executive Vice President Phil Rist. "Consumers are clearly demonstrating their desire to spend this holiday season, and shopping early and often seem to be their new mantra as they seek the best value for all their holiday purchases."
Time Magazine's Brad Tuttle says retailers have lessons to learn from this Black Friday weekend; namely:
Tuttle cautions: "The weekend's monster sales figures have been welcomed as an indicator of consumer confidence, but, as a USA Today column points out, 'The previous top weekend was in the depths of the recession in 2008." As in 2008, 2011 shoppers could have turned out in huge numbers in an attempt to stretch their already-stretched budgets and secure the absolute best prices on the few gifts they can afford this year.'"
"In the coming weeks holiday promotions will continue to drive traffic, as well as sales, as consumers continue to complete their holiday shopping," observes Niemira of the International Council of Shopping Centers in conjunction with Goldman Sachs.