Walmart and competitors should do well this holiday, despite promotions

Thanksgiving has not yet arrived, but the holiday shopping is here, and retailers are wasting no time trying to woo consumers to their stores and websites with seven weeks until Christmas.

Walmart said Thursday (Nov. 8) it will begin offering early Black Friday promotional sales on 18 items sold at Walmart.com for as long as supplies last. Walmart is not waiving its shipping charge for online orders under the $35 minimum, as are its competitors Target and Amazon. Walmart did say it will offer free shipping from marketplace sellers this year, but there is still a $25 minimum order required.

Amazon said this week it’s offering free shipping to everyone on more than 3 million items this holiday season, and there is no minimum order, even for non-Prime members. Amazon said it will continue the free-shipping until it can no longer guarantee delivery in time for Christmas. In most cases, that’s five to seven business days before the holiday.

Target also said it’s bringing back free shipping from Nov. 1 to Dec. 23 with no minimum purchase required. Target, like Walmart, also allows shoppers to pick up most online orders in stores. Target said 95% of orders are available within one hour.

Walmart is hoping to woo customers to its online deals with the early promotions but said it also expects to see plenty of shoppers in stores this holiday season.

“We love Black Friday at Walmart and this year we have pulled out all the stops to provide new ways for customers to get early deals online and also celebrate with us in stores with a party before we kick off Black Friday at 6 p.m. local time on Nov. 22 (Thanksgiving Day),” Steve Bratspies, the chief merchandising officer for Walmart U.S., told the media during a call on Wednesday (Nov. 7).

He said Walmart is more confident than ever customers will find incredible prices in stores and online. To make the shopping experience easier in-store, Walmart recently announced it will offer remote check-outs in certain areas of the stores to help customers avoid long lines. This year Walmart also will offer store maps via its mobile app which matches the color coding of departments and deals for faster navigation in a crowded store on Black Friday.

He said customers on the East Coast will also benefit from the earlier Black Friday online sales promotions which start at 10 p.m. on Wednesday, Nov. 21, two hours earlier than last year. Bratspies did caution that most of the deals will likely be gone by mid-day on Black Friday, Nov. 23, also noting Walmart bought deeper than in years past but the values are competitive on items such as electronics and toys.

He said the two-hour kickoff party in stores ahead of the Black Friday opening (on Thanksgiving) is also a first. During this two-hour window, he said customers can get free coffee and cookies as they plan their shopping agenda on their mobile phone app, which highlights the store departments and deals.

When asked if the wind has gone out the sales of Black Friday given promotions have been moved ahead by most retailers, Bratspies said the season has been stretched longer in the past few years but Black Friday is still a big shopping day at Walmart and it begins on Thanksgiving evening at 6 p.m. local time. He said stores will pause online grocery pickup and same-day pickup for general merchandise orders during Black Friday. He said those operations will resume the following day.

Walmart is not hiring additional personnel this holiday, but is offering more hours for its workers. The retail giant said it will provide free dinner for those who work on Thanksgiving and during the holiday season they also get a 15% additional discount on a basket of items on top of their 10% employee discount.

Amazon and Target also recently said they expect increased holiday sales and are confident in their plans to win customers’ wallet share. This week eMarketer projected sales this holiday season could surpass $1 trillion for the first time in history, with sales revenue is expected to rise 6% from a year ago.

“While e-commerce will continue to see strong double-digit gains, brick-and-mortar retail should be a particularly bright spot this holiday season … retailers are luring in shoppers with remodeled stores, streamlined checkout and options to buy online, or pick up in-store,” said eMarketer analyst Andrew Lipsman.

Sales in brick-and-mortar are expected to grow 4.4% to $878.38 billion, a record for the industry. Online sales are expected to hit $123.73 billion, which would be a 16.6% gain from last year. Online sales will push total sales over the $1 trillion mark this year, Lipsman notes. Cindy Liu, a forecast analyst at eMarketer, said retailers are offering more perks and promotions and that will weigh on margins, no doubt.

A recent report by Morgan Stanley notes Amazon, Walmart, Kroger, Home Depot, Lowe’s and Costco are poised to swallow up much of the sector’s holiday sales. Other segments poised to well include the off-price retail stores such as Ross Stores, TJ Maxx and Burlington which are expected to see same-store sales lift 1.9% from a year ago.

“We continue to view off-price retailers as long-term structural winners given their compelling value proposition and relative protection from eCommerce disintermediation,” Morgan Stanley analysts noted.