This coming Friday, red will be the new black for retailers.
Black Friday – the annual post-Thanksgiving shopping ritual – got its name originally from the profits retailers rack up as consumers load up on big-screen TVs, toys and clothing to kick off the crucial holiday season.
But with a historic financial crisis in full swing, Wall Street now expects that the books of a few major chains – including Saks, Borders and Pier 1 Imports – will be in the red this year, as they take losses on mounds of unsold goods.
“Retailers have had to slash prices to a point where margins are so slim, going into the black is going to be pretty difficult,” said Kit Yarrow, a business professor at Golden Gate University in San Francisco.
For many chains – especially department stores and luxury shops – business hit a wall in October as the Wall Street crisis peaked and sent the stock market tumbling. Since then, some industry insiders have begun referring to this month as “Black November,” as stores like Saks Fifth Avenue, Macy’s and Neiman Marcus have staged lengthy, storewide clearances on fall merchandise, with markdowns as deep as 40 percent to 60 percent.
“The problem is, it didn’t work,” as skittish shoppers have continued to delay spending, Yarrow said.
On Friday, retailers hope business will finally turn a corner. The weekend after Thanksgiving typically accounts for 10 percent of holiday sales, and could exceed that figure this year, according to the International Council of Shopping Centers.
“There’s definitely going to be a big turnout,” said Erin Hershkowitz, a spokeswoman for the trade group. “But we don’t know how it’s going to translate into sales.”
The key question, she said, is whether the deals will impress consumers enough to pull the trigger, rather than wait for still-deeper markdowns in December.
Already, reports are surfacing of 24-inch plasma TVs for under $500, while no-frills laptops are expected to be available for $300 each.