Black Friday Sales Predicted to Decline; Retailers to Struggle

Analysts predict a drop in sales for retailers on Black Friday as movements toward online shopping and weariness with the sales add pressure.  Several analysts at numerous Wall Street firms have released reports warning clients that they should expect to see continued weakness in the retail sector, which has failed to attract revenue growth from falling oil and economists’ predictions of greater consumption.

Analysts predict a drop in sales for retailers on Black Friday as movements toward online shopping and weariness with the sales add pressure.  Several analysts at numerous Wall Street firms have released reports warning clients that they should expect to see continued weakness in the retail sector, which has failed to attract revenue growth from falling oil and economists’ predictions of greater consumption.

In the last quarter, many large American retailers reported disappointing earnings, which caused their shares to drop sharply. Upscale department store Nordstrom saw its shares fall by 15 percent in a single day on weak store sales figures, and the company has failed to recover since then. More recently, retailers targeting middle-income earners Kohl’s, Macy’s, and the Gap have all reported weak sales.

At the same time, the U.S. Census Bureau saw retail sales rise 0.1 percent in September, which fell below expectations, and several economists believe lower spend growth could continue throughout the holiday season. Economists partly attribute this to weak personal income growth, which rose 0.4 percent in October after rising 0.2 percent in September.

Debt Payoff

Economists also note that debt servicing remains a large focus of Americans’ spending right now, with total debt loads falling as Americans choose to avoid leverage instead of indulging in depreciating goods at retail chains.

With less enthusiasm for credit cards and debt, retail analysts believe Black Friday activity will not reach last year’s numbers, although 2014 Black Friday sales constituted a sharp disappointment.

Abandoning Black Friday

Some retailers interpret the weak demand with general disdain for Black Friday as a concept. Some leverage this in a public statement against earlier opening times, as many retailers have chosen to begin Black Friday on Thanksgiving Day. Outdoor clothing firm REI made a large media blitz earlier this month by announcing it would stay closed on both Thursday and Friday, even advertising that it would be closed on both days.

Other retail chains, such as clothing chains H&M and T.J. Maxx, also said they would remain closed on Thanksgiving.

Some retailers remain stalwart on their Thanksgiving Day sales. Walmart will open at 6 p.m. Thanksgiving day for shoppers, and Walmart has announced it will reward workers “with additional pay, free dinner during their shifts, and a 25 percent discount on an entire basket of goods this holiday season”.

That discount does not apply to seasonal workers who have worked with Walmart for fewer than three months.

Walmart also announced that its Black Friday deals would appear online, while Amazon and several other online retailers have begun making Black Friday sales available online both on Thanksgiving and on Black Friday.