Will Black Friday Really Be Black?
Black Friday shoppers were out in force this year, scoping out deals that ranged from flat screened televisions to cameras and GPS equipment. Though the number of shoppers may have been in line with a healthy shopping season, it remains to be seen whether store margins will meet their marks.
Heavy Discounts
Retail outlets pushed prices for electronics and other products substantially lower than last year. One popular electronic commodity was the 32” 720p Television offered by Target, WalMart and Best Buy for prices ranging from $246 to $299 which drove hundreds of people to the popular stores. Target, which had the least expensive television also had the busiest store in my town, with all three stores within .25 miles.
Will Margins Come Through
Margins on electronics have always been thin, however, this years pricing suggest that retailers may have been loss leading to bring shoppers into their stores. The Wall Street Journal did an interesting piece on falling electronics prices, charting the price of 32” LCD TVs over the past two years. In that time, the average 32” set has fallen in price from $700 to an average of $450.
4th Quarter Sets the Stage for 2010
The fourth quarter will give us plenty of pertinent information necessary to understand the condition of the economy going forward. Consumer credit numbers will tell us how willing shoppers are to buy on credit while retailer’s 4Q earnings will indicate to what depths retailers had to drive margins to bring buyers. My guess is that 4Q turns out healthy, despite a 10.2% unemployment rate.
