• by Tom Siebert , November 17, 2006

Online leaks of next week's Black Friday sales circulars are making some retailers see red--both in anger and in bottom line. Others are using it as a form of corporate brinkmanship in the chess game of seasonal sales strategy. The Internet's assault upon the relevance of newspaper freestanding inserts (FSIs) escalates for the biggest shopping day of the year--the day after Thanksgiving.

The proliferation of Web sites like bfads.com, dealtaker.com and gottadeal.com--which print door-buster deals well in advance of their inclusion in Thanksgiving Day newspapers--is changing retail strategy. And it's causing competing retailers to take different tacks to address the situation. Wal-Mart fired the first salvo.

Wal-Mart announced Wednesday that it would add a number of new discounted items on its Web site only on Thanksgiving Day. Best Buy has allegedly threatened legal action against some sites, two of which have removed the circulars. Others, 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. He says it gives Wal-Mart an immediate leg up on the competition.

"[Wal-Mart] actually contacted us and asked: 'How can we help you improve your Black Friday site?'" says Michael Brim, a 19-year-old college student at California Polytechnic who runs bfdeals.com. "They wanted us to help promote some of their Black Friday sales."

Brim says his site removed Best Buy's FSI from his site because he heard through a third party that the retailer was considering legal action. He has contacted the company and is waiting for a response.

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

"From Wal-Mart's point of view, it's a huge benefit," he says. "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?"

Not everyone is celebrating. 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."

Brim says his site does not actively seek out circulars. "Someone gets them, and emails them to us. We don't ask where they came from, but we expect them to come from legitimate sources. ... If I had to assume, I'd say [the source] works for a newspaper or a company that produces the ad," when it's not the retailer itself.

Davis says that while retailers love exposure, different stores may have different prices depending on region. There is no guarantee that the prices that consumers stand in line for on 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 are doing.

The whole thing is "much ado about nothing," counters 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. And there is little downside. "Pandora's box has been opened. You can't stop it."