Black Friday Success Brings Encouraging News for Retailers

Early reports suggest that Black Friday was successful for both online and store retailers. More people hit the shops than last year and online shopping increased significantly over the holiday weekend, prior to “Cyber Monday” when online sales are expected to receive another boost.

The traffic at stores nationwide on Friday increased 2.2 percent over last year’s figures, though spending only increased 0.3 percent, both according to research group ShopperTrak. The slight rise in sales may reflect consumers’ ability to find the best deals online, as Internet sales increased 33 percent over last year on Thanksgiving, while on Friday, sales increased 15.9 percent, according to Coremetrics.

Perhaps the most encouraging statistics were the increased number of shoppers and average amount spent per person from Thursday to Sunday. An estimated 212 million people shopped, up from 195 million last year. That is the highest number of Thanksgiving weekend shoppers since the first survey in 2004 according to The New York Times.

The average spent was about $365, more than a 6 percent increase over last year, according to a survey of about 4,300 Americans by the National Retail Federation.

Consumer confidence appears to be on the rise as well, as the National Retail Federation data indicated shoppers were not only buying gifts, but buying for themselves. Increases in purchases of discretionary items such as jewelry and electronics show that consumers are more willing to splurge on big-ticket items for their own use.

Though these increases may signify that perhaps the economy is indeed slowly on its way to recovery, turnaround professionals do not foresee that Black Friday success and optimistic holiday sales projections will significantly aid U.S. retailers and manufacturers.

“While Black Friday sales appear encouraging they come at the expense of flat or decreasing profitability due to the deep discounting that is occurring to build up volume and deplete inventory,” says Kenneth J. Dalto, principal, Kenneth J. Dalto & Associates of Farmington Hills, Mich. “This will have little effect on the fate of the retailers, who will continue to struggle, especially in the first and second quarters of 2011.”

About 80 percent of respondents to a recent Turnaround Management Association survey said increased holiday sales projections would be insufficient to lift domestic manufacturing orders. If any increase occurs, it will be slight, some said, because retailers are loath to incur excess post-holiday inventory.