Every year, thousands of bargain-hunters brave freezing temperatures and massive crowds to be among the first inside retail stores and shopping malls on "Black Friday," the day after Thanksgiving. It's called "Black Friday" because it's the day retailers are said to move out of the "red" (loss), and into the "black" (profit).

Retailers drastically cut prices on popular products and spend millions of dollars on advertising to draw consumers into their stores on the day after Thanksgiving. It has become a tradition for many, and some might even consider it a sport. Diehard shoppers map out game plans of stores to hit, they scout out which aisles products are in, they camp out overnight, like they were waiting for superbowl tickets, and they participate in tag-team shopping with friends and relatives.

With all the frenzy surrounding the hottest shopping day of the year, retailers are trying to one-up the year before, trying to get us into their stores. What other day of the year can you get a Toshiba DLP Projector for $449, a 42" Plasma TV for $997, or an HP notebook computer under $400 (and the laptop is not even a 20 pound one with a 20 minute battery life)?

The sale lists are highly guarded, however, during the weeks prior to Black Friday. A few web sites, such as gottadeal.com, receive advance copies of the ads (usually from store employees, or their friends and relatives).

Because of high gas prices, the effects of charitable giving from this year's devastating hurricanes, and the worries over inflation and the continued war in Iraq, many analysts are pessimistic about holiday sales.

The general consensus is that consumers will spend less, and minimize their shopping trips. Retailers are pondering what is happening this year, and don't want a repeat of what happened last year, with many being left with large inventories from cutting prices too late.

Retailers are evaluating their inventory levels, and are ready to slash prices. To prime the pump with some great deals, check out a few of the AV products that might entice you to camp out in line the night before Black Friday, with thousands of other shoppers across the country:

CompUSA - Syntex Olevia LT20S 20-inch LCD TV $299.99 normally $499.99)

Maxent 42" Widescreen ED-Ready Plasma Monitor with DVI-HDCP and PC Inputs $999.99 (normally $1,615)
Sears - Protron 32" LCD HDTV Monitor at Sears - $799 (normally $1235)

BestBuy - Toshiba SVGA Digital Projector Model: TDP-S26U $449 (similar to TDP-S25U, normally $899)

See sneak preview of BestBuy's Flyer

Best Buy's $449 Thanksgiving sale price for the TDP-S26 breaks the $599 price level previously reached only by end-of-life projectors, and is almost 50% off the current price of the comparable TDP-S25. With only 2 projectors available per store on Black Friday, this sale is limited and won’t affect overall price levels, but it does suggest the dramatic price moves that projector sellers are willing to experiment with to entice a broader base of consumers into the projector market.

This $449 BestBuy projector promotion is in response to similar Black Friday promotions initiated by CompUSA, Circuit City and Office Max using InFocus and Optoma projectors. On Black Friday CompUSA will also be selling a $495 DLP projector.... only this promotion will feature the Optoma EZPro 938 (normally $899). Retailers know that Black Friday is all about getting people into their stores, and at these unheard of price they will succeed. TFCinfo expects that each of the retailers will sell over 2,000 projectors that morning. Not bad for a morning's work!

Manufacturers are also moving to recruit new customer groups for their higher resolution native-XGA projectors. Dell's 2300MP and InFocus' X3 have been among the leading models that have driven prices below $1300 earlier this year. However, new XGA projector models from Sharp, Optoma, and Toshiba have now broken below the $1,000 range. While this will put more pressure on the prices of SVGA models, it will also increase manufacturers' ability to transition new customer groups to higher value models.


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TFCinfo's Plasma, LCD and Micro-Display Rear Projection Price vs Size Data

You can see just how exciting these recently announced prices are by looking at pricing data from TFCinfo's Plasma & Flat Panel Market Analysis Report:



Gottadeal.com was the first website to release these sale items, and for bargain hunters, this site is the best thing since sliced bread. If you want to check out more of the sale items that have been released for Black Friday shopping, visit gottadeal.com.

Gottadeal.com even noted that David Letterman enjoys Black Friday shopping - watch video.

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Retail Economic Indicators

On the heels of the strongest holiday season in five years, retailers can expect moderate holiday sales growth this year. According to the National Retail Federation (NRF), total holiday retail sales are expected to increase 5.0 percent over last year, bringing holiday spending to $435.3 billion.* In comparison, holiday sales in 2004 rose 6.7 percent to $414.7 billion.

"A combination of many factors, including energy prices, the job market, disposable income, and consumer confidence, will ultimately affect retailers' sales this holiday season," said NRF Chief Economist Rosalind Wells. "Though it might be easy to label gas prices as the make-or-break factor for the holidays, it is crucial for analysts to look at the big picture instead of isolating one economic indicator to project sales."

One-fifth of retail industry sales (19.9%) occur during the holiday season, making it the most important time period of the year for the industry. This year, retailers will struggle with tough comparisons over 2004, which will make significant gains more difficult to achieve. In addition, the effects of Hurricane Katrina and high prices at the pump play a role in the tempered outlook. However, NRF maintains that steady consumer spending and strong second and third quarter gains indicate potential for a solid holiday season.

"Consumers won't have to wait until the last minute to get the best deals this year because retailers are expected to be aggressive in their pricing strategies throughout the entire holiday season," said NRF President and CEO Tracy Mullin. "Stores are planning for holiday sales and promotions, so discounted prices won’t have a negative effect on profits."

Despite the headline news of retail sales strength, we see a moderation in strength. While we do not anticipate a poor showing this holiday season, we are not as optimistic as that anticipated by the retailers themselves through the balance of this year and looking ahead into 2006.

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Personal income, which drives spending, rose 3.4% in 2004, but is estimated to slow to 2.7% in 2005 and 2.5% in 2006. Personal income fell in August after a 0.3% increase the prior month (see chart). Consumer spending meanwhile, adjusted for inflation, was up 3.5% in the first quarter, 3.4% in the second quarter, and 3.9% in the third quarter (see chart). Consumer prices jumped 1.2%, pushing year-over-year inflation to 4.7%, the highest level in more than a decade (see chart). Slowing income growth, coupled with increases in interest rates and inflation, as well as reduced sources of consumer cash, evidenced by the slowing rate of cash out mortgages, in addition to raising energy costs, will result in slowing retail sales.

Month-over-month retail sales have been holding steady at 1.1% (ex. auto) in Sept - in-line with Aug results, while the index of leading economic indicators has been trending downwards.





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Consumer Confidence - Historical Graph

The index of consumer sentiment produced by the University of Michigan is another closely watched barometer of where the economy might be headed next. The graph at the right (data from St. Louis FRED) displays the historical tendency of this indicator to plummet prior to or in the early stages of an economic recession (indicated by shaded areas on the graph). It's not good news that it fell 14% last month, bigger than the 11% drop in September 2001, and bringing the index to its lowest value in 13 years. The less widely followed Investors Business Daily and TechnoMetrica Market Intelligence index of economic optimism likewise experienced a 19% drop in September.



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Latest Consumer Confidence for Nov

However, yesterday, Nov 10, 2005, U.S. consumer confidence rose from a 13-year low, as gasoline prices retreated from post-hurricane records.

The University of Michigan's preliminary index of consumer sentiment rose to 79.9 this month from 74.2 in October. Economists expected the index to rise to 76.5, according to the median of 56 forecasts in a Bloomberg News survey. Estimates ranged from 71.5 to 82.

Putting a positive face on yesterday's news, retailers including Amazon.com predict strong holiday sales as Americans overcome a surge in energy costs caused by Hurricanes Katrina and Rita. A recovery in consumer confidence may help support the spending that accounts for two-thirds of the world's largest economy.

"We've been dealt this very severe blow of a natural disaster compounded by related energy-price increases," Richard DeKaser, chief economist at National City Corp. in Cleveland, said before the report. "To whatever extent we get a more upbeat consumer in the closing months that will be helpful for holiday sales."



In spite of the rebound, consumer confidence is very low, so retailers are going to great lengths to get shoppers in the door and Black Friday is the best chance to start the holiday season off on the right image - hence the $449 Toshiba Projector.

© Copyright 2004 by TFCinfo.com

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