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Retailers Mull Whether To Open on Thanksgiving

By
  • Bloomberg

NEW YORK, United States — As the holidays near, retailers face a dilemma: Open on Thanksgiving and stand accused of ruining a national holiday or stay closed and risk losing sales.

J.C. Penney Co., Staples Inc. and Macy's Inc. are in the first camp, opening earlier this Thanksgiving in a bid to draw bargain hunters. Nordstrom Inc. and Costco Wholesale Corp. plan to remain shuttered, saying that their employees deserve time with their families.

While each strategy carries risks, the Thanksgiving Day holdouts face the possibility that consumers will be tapped out by the time they finally open when the sun rises on Black Friday. The possibility is even more acute as the choppy economic recovery restrains Americans’ spending and the Internet lets them devise detailed plans for landing the best deals.

“The cost to not open is more because it can cause market- share loss if your direct competitor is open,” Poonam Goyal, an analyst for Bloomberg Intelligence, said in an interview. “If the middle-income shopper only has $500 to spend and Wal-Mart snatches $400 of it Thursday, there’s only $100 left for retailers to snatch Friday.”

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J.C. Penney said yesterday it will unlock its doors at 5 p.m., compared with 8 p.m. in 2013. Toys “R” Us Inc. will let in shoppers at 5 p.m., the same time as last year. Macy’s said last month it would open at 6 p.m., two hours earlier than last year. Nordstrom and Costco, meanwhile, plan to stay shut to give employees a break.

Wal-Mart Plans

While Wal-Mart hasn’t announced Thanksgiving plans for this year, most stores operate 24 hours a day and would already be open on the holiday. Representatives of J.C. Penney, Macy’s and Costco didn’t respond to requests for comment.

The Standard & Poor’s 500 Retailing Index fell 0.1 percent at 9:41 a.m. in New York, while the broader S&P 500 fell 0.2 percent.

Even consumers who don’t venture outside may still do some shopping that day. Thanksgiving is poised to feature the seasons’ best offers online with steeper discounts than on Black Friday and Cyber Monday, according to Adobe Systems Inc.’s 2014 Digital Index Online Shopping forecast.

Despite some backlash on social media calling for the holiday to be preserved for family time, retailers are trying to meet customer demand. About 45 percent of consumers plan to shop on Thanksgiving, according to a survey released last month by New York-based consulting firm Accenture.

‘Long Gone’

“Holidays are becoming an excuse for people to go shopping, so the notion people are hanging around the fireplace on a holiday is long gone,” Allen Adamson, chairman of North America for brand consultant Landor Associates in New York, said in an interview. “People are used to shopping whenever they want to, whether the store is open or not.”

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Malls are doing their part to help their tenants capture sales. Mall of America in Bloomington, Minnesota, will open at 6 p.m. on Thanksgiving and remain open until 10 p.m. the following day, said Dan Jasper, a spokesman. Last year, most of the mall’s 500 tenants opened on Thanksgiving, and the mall saw more than 230,000 visitors between then and the end of Black Friday. More are expected this year, he said.

To attract additional traffic, the shopping center is making this Thanksgiving night a family event, offering unlimited amusement-park rides until midnight, with ticket money going to charities, Jasper said.

‘Something to Do’

“A lot of times, the consumers are looking for something to do,” he said. “They’ve spent the whole day with their families.”

Most malls operated by JLL Retail, the largest U.S. third- party retail property manager, will open at 6 p.m. on Thanksgiving, close at midnight, then reopen at 6 a.m. for Black Friday, said Karen Raquet, the company’s director of national property services.

“We’re trying to make sure we’re available for the consumers, but we also want to make sure our consumers don’t walk into a center where there are only 15 stores open,” she said. “Who knows what it’ll be like in a few years because retailers are even more aggressively trying to jump into that consumer’s wallet even earlier.”

The National Retail Federation has said holiday spending will rise 4.1 percent this year, beating last year’s 3.1 percent gain. Holiday shopping is key for retailers, with sales in November and December accounting for about 19 percent of annual revenue, according to the NRF.

Spending More

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Consumers are expected to spend more this year. U.S. shoppers are forecast to shell out 9 percent more on gifts this holiday season, reaching the highest level since 2010, according to a report from Deloitte LLP. Still, they are looking for bargains when they buy, with 74 percent of those surveyed by Deloitte saying they would be influenced by a coupon or promotional offer, the same proportion as last year.

Thanksgiving still isn’t a major shopping day on par with Black Friday, at least not yet. Less than one-third of retailers plan to be open on the holiday, according to a survey of 800 merchants by JLL Retail. The day accounted for only 10 percent of shopper traffic during the holiday weekend last year, according to researcher ShopperTrak.

As in years past, Seattle-based Nordstrom will be closed on Thanksgiving and reveal its first holiday decor Black Friday morning, Dan Evans, a spokesman, said in an e-mailed statement. The chain will have a small team working on the website and at Nordstrom Bank on Thanksgiving for shoppers using the site and the retailer’s credit card, Evans said.

Distinct Offerings

Companies like Costco and Nordstrom, which have distinct product offerings, may not miss out on too many sales by opening on Black Friday morning, Goyal said. Nordstrom may still draw consumers who bought doorbuster deals on electronics and toys, while waiting for apparel from the department-store chain. Meanwhile, Costco will attract customers with its own doorbusters, and its selection may still net additional purchases, she said.

The debate about when to open on Thanksgiving speaks to a larger issue for brick-and-mortar retailers -- how to compete with rivals who never close, Landor’s Adamson said.

“To some extent, there’s only so much more that can be done,” he said. “The pressure is on them to be open all the time because they’re competing with the online store more than the shop down the street.”

By Lindsey Rupp; editors: Nick Turner, Kevin Orland, James Callan.

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