Online Black Friday Leaks Make Retailers See Red ... or Green?

Online leaks of next week's Black Friday sales circulars are making some retailers see red--both in anger and their bottom line--as the Internet assault upon the relevance of newspaper freestanding inserts (FSIs) escalates for the biggest shopping day of the year.

The proliferation of Web sites like bfads.com, dealtaker.com, and gottadeal.com--which print doorbuster deals well in advance of their inclusion in Thanksgiving Day newspapers--is changing retail strategy and causing competing retailers to take different tacks to address the situation.

Wednesday, Wal-Mart announced that it would add a number of new discounted items to its Web site only on Thanksgiving Day. Best Buy has allegedly threatened legal action against some sites, two of which have removed the circulars. Other retailers, like Target, say they will adjust their prices to compete.

The early online appearance of Black Friday ads is "a nuclear bomb" in the war among retailers, according to Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consultancy based in New York City, who says it gives Wal-Mart an immediate leg up on the competition.

The circulars reveal that Wal-Mart is going to be the first marketer to sell a 42-inch high-definition TV for under $1,000--"giant news," says Davidowitz, which is "affecting the stock of Circuit City and Best Buy" because it will force competitors to drop their prices as well during the Q4 period when they generally make most of their profit.

Although he cautioned that he wasn't suggesting Wal-Mart intentionally leaked the circulars, Davidowitz said: "From Wal-Mart's point of view, it's a huge benefit. If you're going to be the market leader, why wouldn't you want to shout it out as loud and as early as possible?"

But not everyone is so happy. Ellen Davis, a spokesperson for the National Retail Federation, says "information was leaked illegally or at least unethically, from a printer, an advertising agency or someone at the client."

Davis says that while retailers love exposure no matter how they get it, since different stores may have different prices depending on region, there's no guarantee that the prices consumers might be standing in line for Friday will be at their specific store. Circulars are constantly being updated, she says, and no one wants to give their competition a heads-up on what they're doing.

The whole thing is "much ado about nothing" anyway, says George Whalin, president and CEO of Retail Management Consultants in San Marcos, CA. "The fact that consumers can't buy these things before Friday and a lot of these products are available only in very limited quality," adds hype that helps all retailers with very little downside. Besides, "Pandora's box has been opened. You can't stop it."