Black Friday Monitors See Big Discounts, Intense Competition

So, what should retail observers look for on Black Friday?

Retail Eye Partners bills itself as a leading independent equity research and consulting firm but its claim to fame is the 40,000 store visits principals Lisa Walters and Sapna Shah have put in over the past three years, the company asserts, the intention of which has been to establish depth of knowledge that helps them provide early reads on retail prospects. Doing all that legwork, and watching a lot of pre-event advertising has allowed them to form some definite ideas about what will influence Black Friday.

Not all their conclusions are conventional. For example, Walters disagree with the statement that the season hasn't produced any real hot items. Sure, it hasn't produced a Wii, but Walters insists that the demand for other products is significant and will help define the season.

She detailed other points of Black Friday interest for Bnet.

Bnet: What should retail observers be looking for in the lead up to Black Friday that will suggest how cutthroat it will be and how successful it might become?

Walters: Early releases of Black Friday ads by key retailers such as Walmart (WMT), Best Buy (BBY), Target (TGT) and Toys"R"Us, not to mention others such as Amazon (AMZN), Staples (SPLS), Kohl's (KSS), J.C. Penney (JCP), all have some of the lowest prices we have seen on key gifting categories such as consumer electronics, toys, books, DVDs, apparel, etc. These are truly the lowest prices we have seen at these retailers all year and have been strategically planned to gain market share and a larger part of the consumer's wallet earlier in the season.

Bnet: Who has the advantage going in and who can and has chosen not to follow Walmart into the event?

Walters: Overall, retailers have significantly lowered inventories so the industry as a whole feels much better positioned to weather the effects of Walmart's aggressive pricing strategy this year. That said, moderate retailers such as Kohl's and J.C. Penney, as well as some value-oriented apparel retailers such as Old Navy feel much better positioned to fight off Walmart this holiday season than some of their peers. In areas where Walmart is actively trying to gain market share -- consumer electronics, toys, books, DVDs -- we believe competitors in the space are going to have to step up to Walmart's challenge to be contenders this season, which could put pressure on their margins and earnings.

Bnet: How will shifts in Black Friday hours of operation change the holiday?

Walters: We don't see it having a large impact as key shopping days such as Black Friday, Cyber Monday, etc. and weekends leading up to Christmas remain the most heavily shopped. It just adds some convenience for shoppers who like fewer crowds or can't make normal hours.

Bnet: Except for maybe one or two video games, hot products seem scarce this holiday season, what effect will that have?

Walters: We beg to differ. We think the lower priced options on flat panel TVs, GPS units, laptops/netbooks and high resolution cameras are likely to be shopper favorites, as well as video games like Call of Duty Modern Warfare 2, the Guitar/DJ/Band Hero series, certain toys, etc. We think the consumer is looking for value and this season retailers are focused on providing it in key gifting areas.

Bnet: How are retailers trying to redefine Black Friday to their advantage and what are the likely effects?

Walters: Earlier sales -- many retailers started 10 to 14 days earlier this year promoting gifting items and lowest prices of the season as well as early Black Friday deals -- not to mention sharper price points, lower opening price points and more mid-level price point options.

Bnet: What will Black Friday tell us about Cyber Monday, or, to put it another way, will Thanksgiving weekend be spent in front of the computer rather than television screen?

Walters: We think consumers still love getting out to the stores and shopping, and with so many great deals being offered, we expect solid traffic both in stores and online over the weekend.