Trend of major US retailers opening on Thanksgiving Day placing internal, external pressure on other retailers to follow suit, amid increasing worries about losing sales to competitors, say analysts

Cindy Allen

Cindy Allen

NEW YORK , November 20, 2012 () – Whether U.S. shoppers and workers like or loathe the encroachment of the holiday shopping season into Thanksgiving Day, one thing is for certain - the trend is not going away.

Even as stores fight charges of spreading holiday creep instead of cheer, retailers are making money out of moving the start of the holiday shopping season from "Black Friday" -- the day after Thanksgiving -- into Thanksgiving night, or even the Day itself.

"Not everybody's going to watch 12 hours of football on Thanksgiving Day. Most people, after 20 minutes of sitting at the dinner table, are ready to get out and do something. Why not cater to the people who are into the sport of shopping?" said Marshal Cohen, chief industry analyst for market research firm NPD.

Retailers like Target Corp, Sears Holdings Corp and Toys R Us Inc have joined Wal-Mart and Gap Inc in staying open on what is a national holiday. Traditionally, stores had waited until Black Friday to make their big push.

There is mounting pressure from Wall Street as well.

"From an investor's standpoint if a retailer is not putting (in) extra hours while competitors are extending them, it would make me wonder how much they can participate in the race for the consumer dollar," said Ken Hemauer, a senior portfolio manager at Robert W. Baird & Co based in Milwaukee.

Between sales, profits and Wall Street expectations, not many think petitions like the one on, asking Target to "save Thanksgiving" by staying shut that day will succeed. The petition had 355,570 supporters at last count.

And not everyone is complaining. A recent survey by the consulting firm Deloitte showed 23 percent plan to shop in stores on Thanksgiving Day - up from 17 percent in last year's survey.

Data on the impact of stores being open on Thanksgiving Day is hard to come by, but Alison Paul, vice chairman and U.S. Retail & Distribution lead Deloitte, said it was likely that sales made that day cut into demand later in the holiday season.

"It shifts spending," she said. "It doesn't create any more spending."

Still, retailers remaining closed on Thanksgiving risk losing out to competitors in the a battle for consumer dollars as the overall spending pie is expected to grow less than last year.

"The upside is not huge, but the downside could be," Paul said.

Industry watchdog National Retail Federation expects holiday sales this year to rise 4.1 percent to $586.1 billion, lower than the 5.6 percent rise in 2011.

A handful of chains like Best Buy Co, Macy's and Kohl's plan to wait to open at midnight on Black Friday, but they are notable for waiting.

"Most retailers have customers lining up in front of their stores for hours anyway (early on Black Friday or even very late in the night on Thanksgiving)," said Dan Butler, vice president, Merchandising and Retail Operations at the National Retail Federation. "If they are going to be there, they might as well be inside. It is silly to have your customers outside in cold, snowy weather."


In an economy that is blowing hot and cold, "doorbuster" deals and other discounts are the best bet stores have to hook customers.

"You're essentially increasing traffic. If you have some merchandise significantly marked down and can get people in through the door, there is a whole range of other products that they'll buy at your location," said Nick Jones, executive vice president, Retail Practice Lead at advertising agency Leo Burnett.

Jim Brownell, vice president Retail Industry Solutions for sourcing company GT Nexus said retailers were using the extra hours of sales to keep up the frenzy as the chase the dollars.

"The retailers are generating it (demand), the consumers aren't demanding it," said Brownell, who had worked with retailers like Williams-Sonoma Inc, Restoration Hardware and Gap.

"Retail is not growing very much, so we're not seeing much more money coming in in the season. It is really who's getting a bigger portion of the sales pie."

The trouble is, items on sale are low margin, so they do not bring in a lot of money unless volumes are high.

"Everybody's worried that the price sensitive customers will go to whoever's open first. They are worried about being late to the game," Eric Anderson, Hartmarx Professor of Marketing at Kellogg School of Management.

NRF's Butler said the number of shoppers ensures that retailers make a profit on that day.

"It is a profitable time for retailers. When they price their goods, even when they are on sales, they price them for profitability," he said.

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