Discount Headlines Matter

 | Nov 23, 2012 | 6:59 AM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

wmt

,

bby

,

tgt

,

jcp

Thursday night I told the family to forget the pumpkin pie, it is time to shop Black Friday deals. While most of my family gave me weird looks, some of them piled into the car in the name of research.

First stop was Target (TGT). We hit the discounter at 7 p.m., well before the 9pm planned opening. By 7:30, close to 150 bargain-crazed consumers were lined up. Last year it struck me when I interviewed consumers that many had no idea what they were lining up for. This year seems to be no different. The first person in line at Target who pitched a tent at 8 a.m. on Turkey Day told me she was looking to "beat others to the best bargains." Surely this woman was intent on nabbing a must-have product that is while supplies last? Nope. She had no idea of the must-haves. But she was confident she would find toy bargains. Many other consumers told me the same story, although scoring the $35 Aero bed was a common theme.

So, how savvy are consumers? The answer is that it depends. Last year I was surprised when I asked Wal-Mart (WMT) consumers if they knew the original prices on the items they were holding in two-hour lines. Nope. They did not know (with the exception of video games).

The exception this year seems to be Best Buy (BBY) as consumers were lined up for the must-have large-screen TV for $180. The problem is that there were 150 people in line by 8 p.m. for the midnight opening, and "supplies are limited." When I questioned the crowd about the possibility of it being out of stock, they told me they were "hopeful." Even the last guy in line was "hopefull." I think the No. 150 guy will be disappointed. When I asked about Plan B I was told a laptop was under $200. Of course I asked what the original price was. Answer: not sure, but it has to be more than $200.

Important retail lesson here. Discount headlines matter. Also, early openings matter. Retail is all about perception, not necessarily reality. That is why Wal-Mart will win share this Black Friday and why JC Penney (JCP) is getting back in the promotional game (finally, after refusing to realize promos matter). Advertising dollars also matter and the early bird gets the worm (WMT opens at 8 a.m. vs. TGT 9 p.m. and JCP at 6 a.m. Friday). For Best Buy, headline deals matter, but watch out for disappointed consumers who are late to the lineup.

Then there are the consumers looking to game the system. I spoke with one bargain hunter who hid his must-have consumer electronics items at the bottom of the towel bin on Tuesday. His theory was that he can come back late Black Friday after crowds have subsided, dig them up and get his deal. After all, it worked for him last year.

Columnist Conversations

1100 Handle May be Around the Corner
The action in the DOW today was the reverse of what we saw yesterday in the index. The rally off the lows in t...
The visualization of data is provided by Capital Market Laboratories (CML). Z is trading $115.95, down 2.8% w...
We are still seeing WYNN hold up above key WEEKLY support here, but I do want to show you what is in the way o...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.