A Flat Black Friday Proves Strong Start for Wal-Mart

It was Wal-Mart giving thanks on Black Friday as consumers literally fought each other over bargains on the day following Thanksgiving. With demand exceeding pre-holiday expectations, Wal-Mart Stores Inc., the world's biggest retailer, estimated that November U.S. same-store sales rose 4.3 percent, nearing the upper end of their 3 to 5 percent growth estimate.

Last year, high prices kept customers away from Wal-Mart stores, leading to only a 0.7 percent increase in November same-store sales. A mistake they were keen to rectify this year. To do so the company launched its advertising campaign on November 1 and severely reduced prices - a move that lured in the consumers.

"This will go down as one of the earliest and most promotional Black Fridays in history. “Many stores opened earlier than ever before and retailers offered unbelievable sales and discounts to get people shopping," says NRF president and CEO Tracy Mullin.

Several major retailers, including Sears Roebuck and Macy's, as well as mall operator Taubman Centers, estimated they drew bigger crowds for the official holiday season launch compared with last year. Lena Michaud, spokeswoman at Target, which had a strong holiday season a year ago but recently cut its same-store sales forecast for November, said traffic was at least as heavy.

“This year, retailers have learned the meaning of the phrase, ‘if you discount, they will come,’” says Mullin. “Lukewarm promotions on Black Friday won’t get consumers out of bed, so most stores went all out this year to ensure that they were part of the holiday hype.”

ShopperTrak RCT Corporation's National Retail Sales Estimate (NRSE), however, reported that compared to 2004, the 2005 holiday retail season got off to a relatively flat start, with sales falling a slight 0.9 percent to $8 billion.

In 2004, Black Friday was the second busiest day of the holiday shopping season, falling just behind the Saturday before Christmas, and initially, it appears this may hold true again in 2005.

According to MarketWatch, credit-card company Visa said that total spending on its branded credit cards on Friday grew about 14 percent from last year to over $3.9 billion, a good initial indication for strong holiday retail sales.

Spending on personal entertainment led the retail category, followed by spending at specialty retail stores and home-and-garden purchases.

"Although the Black Friday number is a bit flat, this may be misleading as we're comparing this to a very strong 2004 performance," said Michael Niemira, chief economist and director of research for the International Council of Shopping Centers. "While Black Friday is important to retailers, it's not always the best indicator for consumer shopping patters during the remainder of the holiday season, which should allow the retail industry to continue feeling optimistic." Niemira continued: "With the extra Saturday this season, added to the continued influence of high energy prices, the consumer may just be waiting until later to begin their holiday spending."

The all-important November-December holiday season can account for as much as half of annual sales and profits for many retailers, especially jewelers, electronics chains and clothing stores.