Will This Retailer's "Black Friday" Sales Ploy Pay Off?
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As retailers release their earnings reports for the third quarter, they are also preparing for what is shaping up to be one of the most lucrative holiday shopping seasons than they've seen in some time. This includes the mother of them all – Wal-Mart (NYSE: WMT), which is taking “Black Friday,” to whole new level.
Not only is it planning on being open on Thanksgiving Day, it is offering a unique, ambitious sales event on turkey day that could steal away customers and further improve its market share during this crucial shopping season.
In a historic move, the company is guaranteeing customers who are shopping for particular wish list items that it will have them on the shelves. This includes Apple’s iPad2. Other items are a 32” television from Emerson and a blu-ray player from LG.
Of course there is a lot more to this guarantee, such as the fact that the items will only be offered with the guarantee for an hour.
Still, this deal is impressive, especially when you consider the bait-and-switch practices that “Black Fridays,” have come to represent. You’ve heard about it, I’m sure. The ad screams some ridiculously low price for a specific item, like a television for example. However, after arriving before the crack of dawn to buy it, you learn the store has sold out. They probably only had 20 in the first place!
So, Wal-Mart seeking to buck this perception through the guarantee is a sharp idea that should bode well with shoppers. It will go hand-in-hand with the constant moving up of the traditional “Black Friday” shopping day hour. Wal-Mart will join other retailers like Target, Sears, and Best Buy that plan to be open on Thursday, Thanksgiving Day. They all plan to offer an array of deals to lure shoppers willing to take time and shop instead of eat and watch football on that day.
This holiday shopping season could prove to be just as important as any other over the past few years for retailers. Following the recession, the retail space saw sales slump as consumers held back on spending. As the horrid effects of the recession have waned, such as the number of people unemployed or worrying about losing their jobs, consumer confidence levels have risen. The Conference Board Consumer Confidence Index increased in September and then again in October. In fact, it rose to its highest level since February 2008 in October.
Retailers reporting strong sales has led to their stocks rallying. So far this year, the S&P 500 retailing index has increased 22%. That compares to a gain of just 12% for the S&P 500.
As mentioned above, many retailers are in the midst of releasing their earnings reports for the third quarter, which will give us an even better idea of how they are faring. While I’m interested in whether or not they miss or beat earnings, I’m equally interested in finding out what, if any guidance they may give.
Already Kohl’s (NYSE: KSS) and Macy’s (NYSE: M) have delivered their reports for the third quarter, and they both increased their guidance for the fourth quarter, which includes the holiday shopping period. For the fourth quarter, Kohl’s expects same-store sales to rise between 3% and 4%, while Macy’s expects its same-store sales to rise 4.2%.
At the time of writing, Wal-Mart and Target were among the retailers that had not reported their third quarter earnings. Both were slated to do so on Nov. 15.
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