Why Wal-Mart's starting Black Friday earlier

The retailer needs to adjust to changing shopping habits and the growth of Amazon and other online shopping sites.

By Jonathan Berr Nov 8, 2012 4:42PM
Is it worth the trouble for Wal-Mart (WMT) to start its Black Friday promotions at 8 p.m. on Thanksgiving, two hours earlier than last year?  Probably yes.

Many pundits argue that starting holiday sales early doesn't spur new sales but rather causes shoppers to make purchases earlier than they would have otherwise. The expenses of keeping stores open on a national holiday have got to be considerable for the world's largest retailer.  Given that people spend less time shopping in stores and more time buying goods online, executives at the Bentonville, Ark., company may they have little choice but to open on Thanksgiving.

"They are trying every trick in the book," said Chris Christoper, an economist at IHS Global Insight, in an interview, adding that Wal-Mart and other bricks-and-mortar retailers also are increasingly competing against online shopping sites, which never close. 

The company is guaranteeing some sweet deals to shoppers in line on Thanksgiving between 10 p.m. and 11 p.m, including Apple's (AAPL) 16GB iPad 2 for $399 (and a $75 Wal-Mart gift card), a 32-inch Emerson LCD TV for $148 and a LG Blu-ray player for $38. If Wal-Mart sells out during that hour, shoppers can buy a card that will get them those items at those prices before Christmas.

Two other rounds of deals will start at 8 p.m. on Thanksgiving and 5 a.m. Friday.Wal-Mart store in Secaucus, New Jersey / Jin Lee/Bloomberg via Getty Images

"This year we are striking a balance between being competitive and meeting customers' demands," said Sarah Spencer, a company spokeswoman.

Wal-Mart, which had been in Wall Street's doghouse for years, has been on a roll lately. Shares of the retailer have surged almost 22% this year, fueled by better-than-expected earnings and a bullish outlook. The company's low-price guarantee appeals to consumers in tough economic times, and its decision to slash layaway fees should also help boost holiday sales. 

Bill Martin, founder of ShopperTrak, said in a statement to MSN Money that Wal-Mart's decision will "have a small additive effect. Mostly, it's retail trying to be first to the wallet. But, early shoppers somehow manage to replenish their wallets as the season goes on and spending continues."

Other retailers are also rolling out the red carpet for consumers this holiday season.

Sears Holdings
(SHLD), which has struggled to compete against Wal-Mart for years, is also opening its doors at 8 p.m. on Thanksgiving. That's a change from last year, when shoppers were able to get bargains starting at 4 a.m. on Black Friday, according to Fox Business. Macy's (M) and Kohl's (KSS) are both planning to open at midnight on Black Friday, the same as last year. Meanwhile, Target (TGT) isn't disclosing its plans, the site says.

Retailers are expecting a decent holiday season as consumer confidence continues to rise.  Christoper is forecasting a 4.5% increase in spending, which, though less than in previous years, represents a solid showing. That forecast, of course, is contingent on the so-called fiscal cliff being avoided.

--Jonathan Berr is long Target.  Follow him on Twitter@jdberr

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1Comment
Nov 8, 2012 5:24PM
avatar
If all of the over $250,000 earners left the country that would leave the people actually doing the work and we would get along just fine.. 
I don't begrudge anyone earning what they earn.  We all have the same opportunity to make it big.  Where I am employed people complain about their wage and I remind them that when they were interviewed they were told what they would start out at.  I ask them if this is a true statement and of course the answer is always yes.  Then I ask, so what is the complaint, you were made an offer and you accepted so shut up or get out.
On the other end of the spectrum you have CEO's making a kajillion $$$.  They also were made an offer.  Did you expect them to say oh no I will come to you as a CEO for $10.00 an hour.  Of course not.  I think they took the same offer and said yes.  Don't scream at the CEO for his money yell at the board that made the offer.
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