Technology, tradition challenge retailers in response to consumer shifts

by The City Wire staff (info@thecitywire.com) 92 views 

Technology and a slight return toward tradition may change nationwide the typical Black Friday shopping rush associated with Thanksgiving. Store opening rules in the Fort Smith and Northwest Arkansas malls appear flexible with retailers. Large retailers like Little Rock-based Dillard’s and smaller retailers like Fort Smith-based Candy Craze will close on Thanksgiving.

While Wal-Mart Stores, Target, Macy’s, Kmart and other large retailers are planning to open and be aggressive with sales and promotions for Thanksgiving and Black Friday, the list of retailers planning to remain closed is somewhat larger than last year. In addition to Dillard’s, Sam’s Club, Costco, GameStop, T.J. Maxx, RadioShack, Marshall’s, Bed Bath & Beyond, Crate and Barrel, and Barnes and Noble are a few of the retailers who will not open on Thanksgiving.

The trend toward more stores being open on Thanksgiving has escalated in recent years, with 2013 marking the first time that some major retailers like J.C. Penney were open on the holiday.

Although there has been more backlash this year against having employees work on the holiday, Steve Osburn, director at management consulting firm Kurt Salmon, said in a recent Daily News Journal report that consumers are becoming acclimated to the idea of shopping on Thanksgiving.

“Consumers have started to accept that shopping on Thanksgiving is a growing habit. With consumer acceptance comes more people shopping,” Osburn said in this report.

Wal-Mart Stores spokesman Randy Hargrove said Wal-Mart is a service company and will be open on Thanksgiving to help customers.

"Most of our stores have been open 24-hrs for more than 25 years – since 1988. Just like restaurants, gas stations and airlines, we see our self in the service industry and remain open as a service to our customers on Thanksgiving. We are the largest grocer in the U.S. and are open for customers needing their forgotten pie crusts, a prescription filled, gas for their car,” Hargrove said.

CANDY CRAZE CLOSED
Tim Bailey, CEO of Fort Smith-based Candy Craze, was not willing to ask employees to work on Thanksgiving, saying in a memo to employees that working on the holiday “seems like too much to ask, just to make a little extra money.” Candy Craze has 31 stores – including one in Fort Smith and two in Northwest Arkansas – in 10 states and employs about 150.

“(W)eighing heavy on my heart and mind is you. Each of you sacrifice time with your families and work inconvenient schedules all year long to operate your stores at peak efficiency,” Bailey noted in his memo. “But Thanksgiving Day is one of the only three days a year that we are closed, and it’s one of the most special days of the year for many of us. … I don’t want any of us to have to work on Thanksgiving Day and I don’t want any of us ‘day people’ going in at midnight and working all night long.”

Bailey said Candy Craze will have a special deal on what he renamed “Sweet Friday” that will give customers a $5 gift certificate who purchase a pound or more of bulk candy.

Closing Candy Craze may come at an economic cost to the company, Bailey admitted.

“I anticipate that most of our malls will be pretty busy and that we will have the opportunity to make a lot of sales and maybe get a good jumpstart on the all-important Holiday Shopping Season,” Bailey wrote.

He also said his family will not shop on Thanksgiving Day.

“I’m not being radical about it or boycotting stores that choose to open that day. I respect other’s choices. But maybe if enough people choose not to shop on Thanksgiving Day, the malls and other retailers will conclude it just isn’t worth the trouble to be open. If not, this will be an even tougher decision next year,” Bailey wrote in the memo.

MALL MOVES
At Central Mall in Fort Smith, the mall is set to open at 6 p.m. on Thanksgiving and close at midnight. The mall is then set to open at 7 a.m. on Friday and close at 10 p.m. Mall officials said there is no blanket rule for shop owners and often the individual lease agreements dictate when they are to be open.

Rhonda Bramell, marketing manager of the Northwest Arkansas Mall, said they met with major retailers to determine their holiday operational plans. She said those corporations send down the final edict of when they expect stores to open. The mall will open its main doors at 8 p.m., Thanksgiving night and most of the larger retailers will open for shopping. She did not have a full list, but said last year roughly half of the mall merchants were open at some point Thanksgiving night. She said some opened for a few hours and then closed for two hours to restock ahead of the Black Friday rush.

"Last year there was a big crowd waiting outside when the mall opened its door at 8 p.m. We expect the same this year." Bramell said.

David Faulkner, general manager of Pinnacle Hills Promenade in Rogers, said the mall will open at 8 p.m. just as it did last year giving each individual retailer the option to open or remain closed until Black Friday. He said about 60% of the retailers and merchants were open during the evening of Thanksgiving 2013.

Because Pinnacle Hills Promenade is an outdoor mall, each store has its own front door facing the street. Inclement weather may hinder crowds because shoppers are in the weather each time they move to a different store. Faulkner said the crowds were good last year, and he expects most of their merchants will open for business at some point on Thanksgiving evening.

Bramell and Faukner each said their respective mall management does not dictate that a merchant open on Thanksgiving Day, but many of the smaller business owners tend to follow the lead of larger retailers and the majority of them plan to open.

WHAT’S AT STAKE
It’s not necessarily a simple or easy decision to remain closed on Thanksgiving, especially among large retailers.

The National Retail Federation has said consumers will spend $50 billion in just the first weekend after Thanksgiving. The NRF said 44.8 million shopped on Thanksgiving Day in 2013, up 27% from 2012. The average shopper spent $407 on Thanksgiving Day in 2013, down 4% compared to 2012.

More than 92 million shopped on Black Friday in 2013, according to the NRF, with 248.7 million shoppers in stores and online over the Thanksgiving shopping period in 2013, up 0.5% over the previous year.

Retailers like Wal-Mart, Target and Toys-R-Us have already kicked off holiday savings events on Nov. 1. These and other retailers are trying to woo shoppers early, well ahead of Black Friday. It's unclear if attempts to attract early bird shoppers will work. Research indicates that consumers tend to focus the majority of shopping in December and more are buying online.

Deloitte anticipates a 13% increase in holiday spending, based on a survey of 5,000 consumers, with average expenditures of $1,299, including gifts, socializing away from home, entertaining, non-gift clothing, and home furnishings. Spending on gifts alone is expected to climb 9% to $458 this year, from $421 last year. That’s a bigger gain than the 4.1% predicted by the National Retail Federation.

And for the second year in a row, Deloitte says the Internet is the No. 1 shopping destination, trumping all other channels with 45% of its respondents intend to shop online. And 68% of those people plan to look at items online, and then check them out in a store, with 49% planning to do the reverse.

“For retailers, the challenge and opportunity is to provide in-demand products as well as product complements and premium options. Additionally, retailers should equip their sales associates to suggest and point customers toward these complementary and premium offerings, particularly if they are only available in other store locations or through its online channel,” Deloitte noted in the report.

TECHNOLOGY, OTHER TRENDS
But despite these early promotions, Deloitte predicts retailers may have trouble luring early shoppers. In its survey, 43% plan to do the bulk of their shopping in December, a jump of 6% from 2013.

Pushing some spending away from Thanksgiving and Black Friday are the Internet and mobile devices.

“Consumers continue to change their shopping habits as well as their expectations of retailers. Shifting spending plans, shopping processes, and expectations are largely the result of improving perceptions of the economy, an onslaught of digital technology influencing consumers, more choices from a growing pool of online competitors, and fears of security breaches,” Deloitte noted in the report.

The report noted that two-thirds (67%) of respondents own a smartphone (up from 50% in 2012), and 50% own a tablet (up from 38% in 2013). Also, 72% of smartphone owners and 69% of tablet owners plan to use their gadgets to assist with holiday shopping. Of that shopping, 50% of in-store retail sales, or $345 billion, will be influenced by digital interactions this holiday season.

Following are other findings from the Deloitte survey and analysis on 2014 holiday spending.
• Just 39% of the men and 45% of the women surveyed said they had set a specific budget (or an approximate budget range) for this year’s holiday shopping.

• Consumers expect to increase their spending by 13% ($1,299 in 2014, up from $1,154 in 2013) across all categories this holiday season. While gifts continue to attract the most customer dollars, spending on home entertaining will increase by 22% year over year — more than in any other category.

• 43% of this year’s respondents said they plan to give gift cards or certificates, down from a high of 69% in 2007. The average amount respondents are planning to spend in total on gift cards is $159.

• 55% of consumers plan to shop at malls this year. However, 28% plan to shop at malls less this year compared with last season.

• Top items consumers plan to give/hope to receive
Clothing
Plan to give: 45%
Hope to receive: 32%

Gift cards/certificates
Plan to give: 43%
Hope to receive: 37%

Books
Plan to give: 31%
Hope to receive: 26%

Games/toys
Plan to give: 29%
Hope to receive: 6%

Food/liquor
Plan to give: 28%
Hope to receive: 21%

Money (cash or check)
Plan to give: 27%
Hope to receive: 35%

• Top 5 shopping venues in 2014
Internet: 45%
Discount/value department stores: 44%
Traditional department stores: 30%
Toy stores: 22%
Off-price stores: 22%

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