by Doug Desjardins
There's no doubt consumers are more confident now than they were at this point last year, but that's not saying much. Sales during the holiday season of 2008 declined 4.5% - the sharpest drop in 40 years - and forecasts for this year are that sales will essentially be flat. 
With that in mind, Black Friday promotions are likely to have that recession-era feel once again with a focus on low prices and giveaways. In 2008, consumers were lured into stores with $10 gift cards just for walking in the door and deep discounts on limited edition items like computers and TVs.
That bargain-basement tone was re-established by Wal-Mart in October when it announced plans to price more than 100 toys under $10 in an amplified version of its "10 Toys for $10" promotion from 2008. Wal-Mart did the same for books when it lowered the pre-order price for 10 high-profile books due out this fall to $8.99, an offer that Target also picked up on.
Wal-Mart went even further on October 21 when vice-chairman of stores Eduardo Castro-Wright announced the chain would stage "weekly deep savings events" starting in late October. "We made a purposeful decision to focus initially on everyday staples as well as items that often require larger spending commitments in preparation for Thanksgiving and Christmas," said Castro-Wright.
Department stores are expected to appeal to frugal consumers as well by promoting everyday apparel essentials on Black Friday and playing down discounts on discretionary items like jewelry.
Despite recent increases in retail spending, including a 2.8% jump in chain store sales in the second week of October, the comparisons are being made against dismal sales numbers from the same time in 2008. The annual Spending Intentions Survey from The NPD Group showed that 30 percent of consumers plan to spend less than they did in 2008, a 4 percent increase from 2008.
"That 4 percent increase is certainly a sign of the times," said NPD chief industry analyst Marshall Cohen. "One the other hand, that 4 percent is not as dramatic as it could have been."
One study from Dallas-based research firm The Hay Group suggests many retailers plan to put less emphasis on Black Friday this year, with only 35 percent of major chains surveyed saying that Black Friday will be their biggest promotional day of the year compared to 45% in 2008. Participants in the survey included Target, Best Buy and American Eagle.
Retailers are also operating in a country where the number of unemployed people is 50% higher than it was in the fall of 2008. According to the U.S. Bureau of Labor Statistics, unemployment at the start of October stood at 9.8 percent compared to just 6.2% in October 2008.
Footnotes
Unemployment by Month 1999-2009
Wal-Mart Rolls Out Steep Holiday Price Cuts
NPD Group Spending Intention Survey
Hay Group survey finds retailers brace for cold sales and hiring this holiday season
COUPON TIME
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