CMOs See Black Friday, Cyber Monday Falling Flat

by Karl Greenberg, Nov 17, 2008, 4:16 PM

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While Black Friday and Cyber Monday--which both occur post-Thanksgiving--have experienced year-over-year sales growth in the past, they will not be doing so this time around, according to chief marketing officers at retail companies. The marketers were surveyed as part of accounting and consulting firm BDO Seidman's "Retail Compass," which queries 100 CMOs in retail firms with at least $100 million in yearly revenue.

Last year, Black Friday saw 8.3% sales growth and Cyber Monday had 21%. This year, retail CMOs are predicting essentially flat sales for those days.

Not surprising is the surveyed CMOs' grim outlook for overall holiday sales, which they see dropping by an average of 2.7%.

What sales gains there may be will come from gift cards, the Web and consumer electronics. The marketing executives surveyed by BDO Seidman expect Internet sales and gift card sales to improve 8% and 5.1%, respectively.

Forty-four percent of surveyed marketers predicted that in-store purchases would drive gift card sales this season. Smaller percentages of marketers predicted that online purchases and third-party vendors (such as kiosks and grocery stores) will drive the most gift card sales.

Ted Vaughan, a partner in the Retail and Consumer Product Practice at BDO Seidman, says that while the year is dismal, "it is important to remember that there are some bright spots on the horizon. There is still enormous growth potential in Internet sales, which remains a fairly new phenomenon. Further, gift cards will be popular this year because they allow the end user to decide on the gift based on their personal needs."

Forty-nine percent of those surveyed said consumer electronics will perform the best versus home goods, toys, lifestyle goods such as books and sporting equipment, apparel and jewelry.

And half of retailers surveyed said they expect Internet sales to increase this holiday season, while 38% expect online sales to stay the same.

Vaughan says holiday sales can make up 35% to 40% of annual sales.

He also says the gift card and Internet increases are a bit misleading. "There was an uptick in gift card sales and Internet sales last year, so the increase this year is a continuation of that trend, but even that trend is slowing down compared to last year and the year before," he says.

"The plus is that if you sell gift cards, the general tendency for someone who redeems the cards is to buy more than the amount on the card."

For Internet sales, the positive for retailers is that when consumers come online looking for a particular product "the Internet makes it so easy to browse; they will be able to find other products they may not have had in mind."

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