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5:34 am
Sat November 24, 2012

Retail Arms Race Escalates To New Level

Originally published on Sat November 24, 2012 9:30 am

Transcript

SCOTT SIMON, HOST:

In American retail history, this may be the year that Black Friday shaded into Thursday night. Toys "R" Us, Wal-Mart, several other retailers opened on Thursday night, Thanksgiving night, and on Friday, many other online retailers offered flash sales - special deals lasting just a couple of hours. Patty Edwards is the chief investment officer for Trutina Financial, a financial services firm in Washington state. She joins us from member station KUOW in Seattle. Thanks so much for being with us.

PATTY EDWARDS: Absolutely my pleasure.

SIMON: And do we know yet if opening for business on Thanksgiving Night was a successful sales strategy?

EDWARDS: Well, we don't have the hard numbers yet, but I can tell you that driving around checking out the lines outside a number of stores, there were a lot of people out there at 8 o'clock in the evening lining up, especially at Wal-Mart, to get some of those deals.

SIMON: What was the figuring retailers used? I mean, did they have actual information where people said, no, if you opened on Thanksgiving Night maybe I'd go?

EDWARDS: You know, I don't know that that was especially true. But what I think we've really gotten into is almost like a nuclear arms race in retail, where if they're going to open earlier, I've got to open earlier. And so it started creeping earlier and earlier last year. We got to a midnight open, which was unusually. Five years ago, it was 5 o'clock in the morning. And now we opened at 8 o'clock. That being said, you know, I think that they are just pulling sales forward from sales that would have happened later in the weekend, and I'm not sure that they're going to see in the end that it's really been to their benefit.

SIMON: So, this doesn't mean that next year you'll necessarily have lines at noon and retailers passing out turkey drumsticks so that families can do away with traditional Thanksgiving dinner and they'll just get straight to the shopping?

EDWARDS: Well, I certainly hope not. I mean, I think the Thanksgiving holiday certainly adds something to our lives. But that being said, the folks who were in the lines at the front of the lines had been there since noon in order to get those $200 flat-screen TVs and such.

SIMON: Let me ask about the big online sales that people now call Cyber Monday. How have they changed the strategies of actual stores?

EDWARDS: Well, we know that retailers that have an online presence actually get a lot more loyalty out of their customers. And so Wal-Mart, Target, Nordstrom, among others, are allowing you to buy online and actually even pick it up in-store.

SIMON: Now, the advantage to the retailer for buying online but picking it up in-store is to get people into the tents, so that they might see something else?

EDWARDS: Exactly. You'll notice if you do the buy online and pick up in store that it's never right by the door. You're going to have to go to the back of the store in order to pick up your goods. And as you're walking through, there's probably going to be something that'll catch your eye. They're counting on parting you for more of your dollars.

SIMON: So, Ms. Edwards, is your impression so far that some of these strategies are resulting in more sales or just spacing a finite number of sales out differently during the weeks leading up to the holidays?

EDWARDS: The strategy this year seems to be get the consumer into your store early and get those dollars out of their wallet fast so that they go to your store, not someone else's. I think that we will see that they've actually pulled sales forward into the Black Friday weekend. And then when we get into further into December you're going to see sales start to wane, and unfortunately, I think you're going to start to see some of these retailers panic, slash prices and that'll actually hurt their margins. But it might be good for consumers.

SIMON: Well, let me ask about the hurting the margins part, because in the end you can argue that that hurts consumers too, in that it cuts down on the number of jobs that might be created by retail.

EDWARDS: It does cut down on the number of jobs. But that being said, retailers have to have a certain amount of presence in the stores. There have to be a certain number of clerks. And so as long as they get the sales over the entire holiday period, I don't know that it's going to cut down on the number of jobs too much. If you look at the hiring that happened this year, there was substantial hiring from Toys "R" Us, from Target and from Wal-Mart for the holidays, but it was less hiring this year than it was last.

SIMON: Patty Edwards, chief investment officer for Trutina Financial, joining us from Seattle. Thanks so much for being with us.

EDWARDS: My pleasure. Transcript provided by NPR, Copyright NPR.