FOCUS-Early Black Friday 'deals' abound, but actual bargains are scarce
Retailers such as Target Corp and Kohls Corp are slashing prices by as much as 50% on toys and other popular holiday gifts in early Black Friday deals aimed at increasingly frugal consumers - but the bargains aren't what they seem. Discounts on toys are up this year compared to last, when supply-chain snarls made it difficult to get products on store shelves and consumers were flush with cash, according to e-commerce analytics firm DataWeave.
- United States
Retailers such as Target Corp and Kohls Corp are slashing prices by as much as 50% on toys and other popular holiday gifts in early Black Friday deals aimed at increasingly frugal consumers - but the bargains aren't what they seem.
Discounts on toys are up this year compared to last, when supply-chain snarls made it difficult to get products on store shelves and consumers were flush with cash, according to e-commerce analytics firm DataWeave. But, even with the steeper discounts, consumers still have to shell out more for popular products like a PJ Masks toy car or Mattel Inc's Mega Hauler semi-truck, because prices have risen faster than promotions, according to data provided by DataWeave.
Melissa Benhaim, a 32-year-old publicist in Miami, started her holiday shopping slightly later than usual this year. "Even for a few purchases I’ve been planning to make for myself for a few months now, I’m waiting to see if I’ll get a better deal around Black Friday or Cyber Monday," she said. "I prefer to try clothes on rather than order online. I typically don’t buy clothes as holiday gifts for others unless I know their size and style in a particular store."
Deeper discounts may be yet to come as sales at Target and Macy's Inc, major holiday shopping destinations, fell unexpectedly in October and November, executives said on conference calls this week. Many shoppers are waiting until Black Friday, the day after Thanksgiving, and Cyber Monday, November 28, to pounce on potentially better deals as they pinch pennies, retail executives said on conference calls this week. A Saturday shopping day between Thanksgiving and Christmas this year gives shoppers extra time to hold out for better bargains.
Holiday shopping is expected to slow broadly. “Customers at the lower tier ... they are purposefully shopping,” said Jessica Ramirez, a research analyst at advisory firm Jane Hali & Associates LLC. “They buy when they’re ready and when it’s needed. We do expect to see more frequent store visits but smaller baskets.” Retailers including Kohl's and Foot Locker Inc have offered more generous deals compared to last year, according to a research note from Jane Hali.
Clothing is the only category this year that is cheaper than last when accounting for both discounts and changes in manufacturer's suggested price, according to DataWeave. DataWeave found that sweatpants and Land's End joggers at Kohls, and jeans from outdoorsy chain Cabela's Inc, are as much as 30% cheaper than last year.
Ramirez added that shoppers may also opt for cosmetics and beauty purchases this year over pricier shoes. “It’s an easier buy at a different price point,” Ramirez said. “Make-up is another way to dress up without having to splurge.” A warning from Target that toy sales slowed down was "a little scary," said Joe Feldman, senior managing director at consumer-focused research firm Telsey Advisory Group. Discounts on toys and electronics were bigger globally every month so far this year except for January and February, according to separate data from Salesforce.com.
But toy prices, even with discounts, are up about 2.4%, DataWeave found. The suggested price for a PJ Masks Glow & Go Gekko mobile car toy by Hasbro is $22.99, up nearly 10% from last year. Shoppers are paying $16.99 for the toy this year at Kohl's, after discounts, compared to $11.54 last year, according to DataWeave.
Retailers that hold off on competitive deals risk getting stuck with costly inventory - a dynamic that will likely lead to further discounts later this month and early next. Early holiday deals have not been big enough yet for shoppers to "bite" and consumers are waiting to see the biggest discounts during Cyber Week, said Rob Garf, vice president of retail at Salesforce.
Hasbro's Nerf Gelfire, a toy gun that shoots gel beads, was on sale on Monday for $20 off the list price of $79.99 on Target.com. Action figures from Black Panther Wakanda Forever, also made by Hasbro, were also 30% off at Target. Hasbro earmarks 70% of its advertising budget for October, November and December, said CEO Chris Cocks in an interview with Reuters this month.
“It's really heavily weighted in November, December," he said. "If you just think about the number of promotions we're going to have, the number of Black Friday deals, and advertising we're going to have, (it's going) to be significantly bigger this year (than) it's been in the last two years." Mattel Chief Financial Officer Anthony DiSilvestro said on the company’s third-quarter earnings call that the toymaker expects increased discounts and promotions that will squeeze its margins in the fourth quarter.
Mattel’s 5-Barbie playset on Tuesday was discounted to $49.00 from $119.88 for Walmart.com shoppers, while its 18-piece fashion doll set was on clearance at buybuyBaby.com. But broadly, prices on merchandise across many categories rose 14% in the United States and 8% globally compared to 2020, according to Salesforce.
Dwight Hill, vice president of retail North America at digital consultancy Publicis Sapient, said that consumers have long been trained to wait for the best deals and watch retailers "race to the bottom."
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)