Wal-Mart, Target Gird for Toughest Black Friday Battle Yet The retailers are offering deeper and longer discounts this coming Black Friday, fighting to win a holiday neither can afford to lose.
This story originally appeared on Fortune Magazine
The largest U.S. retailers have thrown down the gauntlet this year and announced deeper Black Friday weekend discounts than ever over a longer period, as they are desperate not to lose a single penny to the competition during the holiday shopping wars.
Wal-Mart Stores, which recently lowered its sales forecast for the year, stirring fears about its holiday prospects, has announced an aggressive program of deals for what is now a full-on Black Friday week. The plan includes bigger deals than last year on items such as TVs on Thanksgiving itself, week-long price cuts on 3,700 more items than in 2013, and a 24-hour pre-Black Friday sale today on its website.
Wal-Mart's go-for-the-throat strategy comes as the retailer tries to return to U.S. comparable sales growth after six quarters. Black Friday, which now is the anchor to what has become a week-long kick-off to the holiday shopping season, isn't always a firm indicator of how the holiday season will shape up for retailers. But no store can afford to do poorly that weekend, which sets the tone for a season that generates 30% of annual sales on average.
Target —also in need of a successful holiday season after a Grinch called "Databreach" stole Christmas last year—has similarly been aggressive, holding a pre-Black Friday online sale this week and has removed all shipping costs since Oct. 22 through Dec. 20.
"You've seen a number of retailers pull forward their events throughout the weekend, and you're seeing a lot of activity, which tells me it's going to be very competitive," Duncan MacNaughton, Walmart U.S.'s chief merchandising officer, told reporters during a media briefing.
Wal-Mart will kick off its Black Friday festivities with an online sale at midnight on Thanksgiving, continue with its first full-on in-store Black Friday (note to the retail industry—we need a new name for this—since the sales now start on Thursday) event at 6 p.m. that day, including nine items which Walmart guarantees that customers can buy between 6 p.m. or 7 p.m. get regardless of whether the store runs out of inventory. A second sale focused on electronics will start at 8 p.m., and a third sale will start at 6 a.m. on Friday the 28th. (Walmart stores have been open on Thanksgiving since 1988.)
And gross margins be damned, Wal-Mart's prices appear to be lower than last year's when Walmart sold a Vizio 60" Smart TV sold for $688 on Black Friday—this year a 65" Vizio Smart TV goes for $648. Wal-Mart is leaving nothing to chance—for the first time it is offering maps for each of its 4,000 or so stores so shoppers don't get lost looking for that flatscreen being stocked in the frozen food section on this one occasion.
Target is also going all-in with more deals this year. The discount chain, which already held a pre-sale this week, will offer Black Friday deals starting on the preceding Sunday that will last for a week. And it will offer a few items on sale early on the Wednesday before the holiday. Meanwhile, Best Buy, to get a leg up on its rivals on a shopping day that is heavy on electronics, will open its stores at 5 p.m. on Thanksgiving with Black Friday deals. Its stores will remain open until 1 a.m., then re-open at 8 a.m. It will also hold an online-only "doorbuster" sale on Thanksgiving.
The onslaught of promotion is a tacit acknowledgement by retailers of how tough the season is going to be.
"Overall, just because you've moved the sales up, or extended them, or expanded Thanksgiving, that doesn't increase the amount of money people will spend for the season," said Craig Johnson, president of Customer Growth Partners, which has forecast a "sluggish" holiday season.
Wal-Mart appears to be dialing it up a notch this year—despite its big efforts in 2013, and Target's abysmal holiday, Walmart was unable to pull off a holiday quarter with positive comparable sales growth in the holiday quarter last year.
It's become a truism that Black Friday has been diluted by earlier and earlier sales in November, and the likes of mainstream stores like Macy's and J.C. Penney opening on Thanksgiving. But the fact remains, Black Friday is still a big deal: ShopperTrak, a data firm, expects Black Friday to remain the second biggest sales day of the season, after the final Saturday before Christmas.