Neiman Marcus sold out 10 Ferraris at $395,000 each under an hour of making them available
As the busiest retail weekend of the year begins late Thursday night, the differences between how affluent and more ordinary Americans shop in the uncertain economy will be on unusually vivid display.
Toys “R” Us, Wal-Mart, Macy’s, Kohl’s, Best Buy and Target will start their Black Friday sales earlier than ever — at 9 and 10 p.m. in some instances — with dirt-cheap offers intended to secure their customers’ limited dollars. A half a day later, on Friday morning, higher-end stores like Neiman Marcus, Saks Fifth Avenue and Nordstrom will open with only a sprinkling of special sales.
The low-end and midrange retailers are risking low margins as they cut prices to attract shoppers, while executives at luxury stores say that they are actually able to sell more at full price than in recent boom years.
“We’re now into a less promotional environment than we were before the recession,“ said Stephen I. Sadove, chairman and chief executive of Saks. In the third quarter, for instance, Saks reduced the length of an annual sale to three days from four, and excluded the high-margin category of cosmetics from another regular sale.
Retail analysts are expecting a decent holiday season, with many estimating that sales will increase about 3 percent over last year, with contributions from shoppers across income levels. Yet the Friday after Thanksgiving, the kickoff to the highest-revenue weeks for stores, is expected to lay bare the increasingly parallel universes of retailing in America, the analysts said.
“Those in a more modest income situation are the people who are going to the Wal-Marts and the Best Buys and the Targets at 8, 9, 10, 11 p.m. with little kids in tow because they can’t afford a baby sitter,” said Craig Johnson, president of Customer Growth Partners, a retail consultant firm. “It’s a very unpleasant shopping experience, frankly, for a lot of people.”
Meanwhile, many affluent shoppers will avoid the scene altogether, he said. “The women who are shopping the fourth floor at Saks are not Black Friday shoppers,” he said…
“If you talk to people who are in my business, people who analyze our business, they would consistently tell you that stores at the mall, especially anchor stores, are more promotional than they were last year,” he said. “Now that may not be true at the high end — the strength of the business or the higher-end consumer has allowed them to do a little less promotion — but that’s high end.”
At Saks Fifth Avenue and other luxury stores, full-price selling has generally been increasing. So the few deals at luxury stores on Friday are not so much bargains as token nods to the Black Friday tradition. Saks is offering half off cashmere sweaters, Neiman Marcus is giving discounts on a future shopping trip when people spend more than $100, while Nordstrom says it does not have big promotions planned.
High-end retailers “don’t have to do anything desperate — it’s kind of hard to see a 5 a.m. queue outside of a Fifth Avenue luxury retailer,” said Chris Donnelly, a senior executive in Accenture’s retail practice. “If you don’t have to put it on sale and people are still going to buy it, why put it on sale?”
Since I’m a news junkie who actually prefers to watch news instead of consuming what some media hack considers entertainment – I get a lot of my TV news coverage from business channels like Bloomberg TV. Folks in business, concerned with markets and investing, haven’t any inclination to watch crap. There’s a lot more news on hand in a half-hour of Bloomberg TV than you might bump into on CNN or one of the truly cruddy network news programs in an hour or two.
Consequently, I absorb a lot of business and sales analysis – by osmosis, I guess.
Some of the soundest economists I’ve watched feel the growth in sales for this holiday season will surpass 6%. More than anything suggested in this article. The question is how much of that is the bump at the upper end from the folks with serious increases in their disposable income – over the same period that’s seen a continuation of the decline in real income for the American middle class that started to nosedive with the Bush/Cheney election?