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Black Friday sales expected to jump 3.8%

November 21, 2010

Black Friday sales expected to jump 3.8%
By BDO USA, LLP

Chicago, IL,  – According to BDO USA, LLP, one of the nation’s leading accounting and consulting organizations, chief marketing officers (CMOs) at leading U.S. retailers expect Black Friday sales to increase by 3.8 percent and Cyber Monday sales to grow by 2.5 percent this holiday season. Black Friday and Cyber Monday expectations are more bullish this year compared to 2009 when both were expected to rise by 1.8 percent.

Discount fever has subsided to some extent this year. Sixty-four percent of CMOs expect to see more discounts and promotions this holiday season, a notable decline from 2009 when 96 percent said they planned more discounts. More than one-third (36%) do not expect to see an uptick in offerings.

“Higher sales expectations for Black Friday and Cyber Monday indicate that 5 a.m. door-buster holiday sales are still crucial revenue drivers for the retail industry,” said Ted Vaughan, Partner, Retail and Consumer Product Practice, BDO USA. “This year, however, retailers may have turned the corner on the bargain-basement prices seen in 2009. Our survey results show that retailers will likely look to create more of a balance in promotional offers this year, slightly scaling back on excessive discounts and targeting more promotions in-stores.”

These findings are from the most recent edition of the BDO USA Retail Compass Survey of CMOs, which examined the opinions of 100 chief marketing officers at leading retailers located throughout the country. The retailers in the study were among the largest in the country, with revenues ranging from $100 million to $100 billion. The survey was conducted in October of 2010.

The major findings of the BDO USA Retail Compass Survey of CMOs include:

Consumer Electronics Continue to See Big Discounts. Forty-three percent of CMOs say consumer electronics will see the most discounts this year, a continued trend from 2009 (37%). Given that manufacturers are still dealing with inventory glut for products like flat-panels, deep discounts will likely be the key driver of consumer demand. Fewer CMOs (4% v. 14% in 2009) expect home goods to see the most discounts, a sign that shoppers are moving beyond practical gift items. Other product categories where CMOs expect to see the most discounts include: apparel (30%), jewelry (14%), toys (6%) and lifestyle goods (3%).

Retailers Target Bricks vs. Clicks for Promotions. More than half (59%) of CMOs are targeting the majority of their discount and promotion offers in stores. Despite the popularity of social media and strength in mobile commerce, only 17 percent of CMOs are focusing the majority of their discounts and promotions online. Almost one-fourth (24%) are hedging their bets with an equal focus on in-store and online promotions.

In-Store Events Key to Getting Shoppers in the Door. To convince shoppers to turn off their computers and brave the masses, the majority of CMOs (56%) plan to focus most heavily on in-store events. Other promotional tactics retailers cite as a major focus include: loyalty programs (21%), buy-one-get-one-free promotions (9%), pre-Thanksgiving discounts (8%) and extended hours (6%).

E-mail Promotions Still Top Online Moneymaker. When asked what online promotional tactic would yield the most sales this holiday season, 45 percent of CMOs pointed to e-mail promotions. Retailers are also confident that free shipping (22%) and search engine marketing (21%) will generate a high number of sales. Despite the popularity of social networking sites, only 10 percent of CMOs expect promotions through social networking to produce the most sales.

Higher Expectations for 2010 Black Friday Sales. Retail CMOs project a 3.8 percent increase in Black Friday sales this holiday season, a solid jump in expectations from 2009 (1.8%) and 2008 (1.2%). More than one-third (38%) of CMOs expect Black Friday sales to increase, an uptick in expectations from 2009 (33%) and 2008 (16%). Still, the majority of CMOs (59%) say they expect Black Friday sales to be flat this year, a continued trend from 2009 (61%) and 2008 (68%).

Retailers Predict a Modest Cyber Monday. Retail CMOs project a 2.5 percentage increase in Cyber Monday sales this holiday season, up from 2009 (1.8%). Most CMOs (74%) say they expect Cyber Monday sales to stay flat for the 2010 holiday season, a continued trend from 2009 (65%) and 2008 (64%). Conversely, almost a quarter of CMOs (24%) forecast an increase.

The BDO USA, LLP Retail Compass Survey of CMOs is a national telephone survey conducted by Market Measurement, Inc., an independent market research consulting firm, whose executive interviewers spoke directly to chief marketing officers, using a telephone survey conducted within a scientifically-developed, pure random sample of the nation’s retailers.

  
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