Black Friday Brightens Retail Outlook

By Matt Hines  |  Posted 2005-11-28

Black Friday Brightens Retail Outlook

From Apple to Wal-Mart, the first round of results from the hotly anticipated holiday buying season point toward another banner year for consumer electronics retailers and e-commerce sites.

A number of sources reported strong demand from consumers in the retail market on Monday as buyers flocked to stores and Web sites over the weekend.

The unofficial kickoff to the annual end-of-the-year consumer spending spree came the day after the Thanksgiving holiday, a day that is increasingly being referred to as "Black Friday."

The event takes its colorful nickname for helping consumer products manufacturers and distributors achieve profitability, or get "into the black," for the year.

According to Internet statisticians Nielsen/NetRatings, the first weekend of the holiday buying season was a resounding success for online retailers, or e-tailers, as the New York-based research group reported a 29 percent increase in its eShopping Index, which measures e-commerce site traffic.

Is Black Friday secrecy a relic of the past? Click here to read more.

Nielsen/NetRatings said that based on the survey of over 100 e-tail companies, those firms drew 17.2 million unique visits on Friday alone, a substantial increase over the 13.3 million hits that e-commerce sites tracked by the group attracted on the same day last year.

Among the big winners according to Nielsen/NetRatings results were online auctioneer eBay Inc., e-tailer and the Web site for Wal-Mart Stores Inc.

The research firm reported that eBay was the top online retailer on Black Friday, with 9.5 million unique visitors, followed by Amazon and Wal-Mart Stores, which drew 4.6 million and 3.4 million unique visitors, respectively.

Rounding out the top five performers were the sites of retail chains Target Corp. and Best Buy Co., which attracted unique audiences of 2.9 million and 2.1 million, respectively.

The same group of retailers led Nielsen/NetRatings 2004 Black Friday list, and were joined in the top ten this year by, and the Network.

According to researchers at the National Retail Federation, which is based in Washington and represents the interests of the retail industry, over 145 million people hit the stores and the Internet over the weekend with the average consumer spending just over $300.

If accurate, that figure would indicate that total revenue for retailers was $27.8 billion, a sizeable 21.9 percent increase over the $22.8 billion spent over the same timeframe in 2004.

The NRF estimated that over 60 million people hit retail stores and sites on Black Friday, representing an increase of 7.9 percent over the same day last year.

The industry group said that an additional 52.8 million shoppers were out on Saturday, a gain of 13.3 percent over 2004, and reported that as many as 22 million people hit retailers on Sunday.

Despite the early returns, NRF executives pointed out that retailers will need to drive additional sales to meet last years figures and improve on 2004 results.

"As expected, retailers offered substantial discounts and savings on Black Friday to bring people into their stores and consumers held up their end of the bargain by shopping," NRF CEO Tracy Mullin said in a statement.

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Stores Will Not Rest

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"Even though many retailers saw strong sales this past weekend, companies will not be basking in their success. Stores are already warming up for the next four weeks because the holiday season is far from over."

In addition to increased traffic, consumer interest in computers, video game consoles and other personal electronics devices appears to be growing again in 2005.

Based on its research, the NRF said that the electronics category saw the most significant gains compared to Black Friday weekend 2004, with roughly 37 percent of all shoppers buying some sort of gadget, an increase from approximately 32 percent one year ago.

An estimated 47 percent of all weekend shoppers bought something from the books, CDs, DVDs, videos and video games category, while clothing and accessories led the way, luring almost 50 percent of the consumers tracked by the group.

Click here to read about the success of the new Apple iPods.

Nielsen/NetRatings also reported strong sales for technology-oriented items to consumers. The researcher firm highlighted the toys/video games segment as the fastest growing category in its surveys over the weekend, with a 152 percent week-over-week growth.

Consumer electronics followed close behind with 142 percent week-over-week growth, and computer hardware/software rounded out the top three categories with 102 percent growth, compared to the week before Black Friday.

Overall week-over-week growth for the Holiday eShopping Index was 39 percent, the company said.

Products that proved to be big winners with consumers included Microsoft Corp.s newly released xBox 360, which was sold out of most retailers, and Apple Inc.s iPod handheld digital music players.

Analysts with Nielsen/NetRatings said that an increasing number of shoppers said that they are using the Web to price check items before heading to stores, and that they look to be buying more items online in 2005.

"While many shoppers headed out to the stores over the weekend, the majority first turned to the Internet to check prices and product availability," said Heather Dougherty, senior retail analyst with Nielsen/NetRatings.

"(The) consumer electronics and computer hardware categories also attracted holiday shoppers to the Web to research and purchase this years hottest gift items, including flat-screen TVs, iPods and other MP3 players.

"Price slashing and heavy demand will drive significant sales in these categories this holiday season," she added.

Not surprisingly, Apples iPod was atop several lists of hot-selling items over the weekend, with the companys powerful iPod Nano, which retails for roughly $200, coming in second in Amazon.coms consumer electronics category. The $100 iPod Shuffle was third in overall sales since Friday.

The only item outpacing the Apple products on Amazon was a $40 DVD player from manufacturer CyberHome Entertainment Inc.

Retailer Best Buy Co.s Web site sold out of the high end $250 4GB iPod Nano over the weekend.

Industry watchers said that the reported gains in consumer spending for 2005 should be viewed with some caution, as retailers will need to sustain their early performance in order to record growth for the entire holiday season.

Greg Buzek, analyst with IHL Consulting Group, Franklin, Tenn., said that reports of a slowing economy have not held true thus far and he believes the 2005 season could be a record year, especially in the e-tail arena.

"We continue to see growth in online shopping, as people are getting less enthusiastic about going to the stores and fighting the crowds and getting more comfortable with retailers sites," Buzek said.

Click here to read about the popularity of Xbox 360.

"This year looks promising as the economy continues to drive consumer sales; there could be some pushback with Katrina and the others storms, and from major layoffs at U.S. airlines and automakers, but overall the market is booming."

While Buzek believes the best deals for consumer electronics wont actually come for several more weeks, he said that many shoppers are happy to order the goods online rather than save a few dollars on the high-ticket items by hitting in-store promotions and sales.

The analyst said that retailers themselves also invested heavily in new point-of-sales technologies this year, which usually equates to stronger returns for the companies.

"Retailers spending more money on technology is always a sign that theyre expecting a solid gain with holidays, as people who did poorly last year retooled and those that did well are looking for new ways to increase sales," he said.

Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.

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