Retailers looking to 'Black Friday' for revenue gains

A customer compare prices of sale items
Shoppers prepare for "black Friday," known as one of the busiest shopping days of the year.

It's one of the biggest shopping days of the year, and retailers are slashing prices to get customers in the door.

First of all, let's clarify what Black Friday means. It sounds so dire, as though black clouds will fill the sky and the world will come to an end tomorrow.

Really, though, the name suggests something positive for retailers, it's supposedly when they start turning a profit and go into the black.

It's charming lore. But not exactly correct.

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"We both know that's imbecilic. Target and Best Buy and everybody else, Wal-Mart, makes money ever quarter," said Howard Davidowitz, a retail consultant. "Imbecilic! So there's nothing to discuss as far as that goes."

As he so passionately points out, Black Friday is not a total game changer for retailers. They're typically profitable all year long. But of course, they're much less profitable lately.

In the past few months, consumer confidence has hit historic lows. And, according to the Fitch Ratings, retail sales declined during the back-to-school period for the first time since 2001.

Against that backdrop, Davidowitz said Black Friday's stakes are somewhat higher this year.

"It's an opportunity to drive business," he said. He added that retailers do that by using "doorbusters."

"Doorbusters" are the highly-discounted items available for a limited period of time that get people in the stores.

You can typically find them on a retailer's own Web site, like Best Buy's. Customers of the consumer electronics giant are expected to line up at stores well before they open at 5 a.m. Friday to get first dibs.

Vice president of Marketing, Greg Johnson, said a few items will probably sell especially well.

"We know that plasma televisions and LCD TVs are going to be hot this holiday season," Johnson said. "During the holiday season it's about connecting and enjoying and coming together as a family. And oftentimes people open up that particular gift before their holiday season even begins."

According to Best Buy's Web site, on Friday you can pick up a 42-inch SONY LCD HDTV for about $1500, a $700 discount.

Retailers like Best Buy slash prices on those big ticket items in hopes that people will accessorize the TV, with, say, a Blu-ray Disc player.

And Best Buy needs customers to pile on those accessories this Friday. The company recently said this is the worst environment in company history.

Minneapolis-based Target has also seen hard times.

The discount retailer's third-quarter earnings fell about 25 percent compared to the year before.

Retail analyst Howard Davidowitz said both Best Buy and Target are in a bind competing with Wal-Mart, which is outperforming them both.

"When you have to beat Wal-Mart on price, that is not fun," Davidowitz said.

So does that ratchet up the stakes of Black Friday for Target? Spokesman Joshua Thomas won't spell out exactly how much rides on the day.

"We anticipate it will be a competitive holiday season as the holiday season always is," Thomas said. "We're really concentrated on providing our guests with exceptional value."

Thomas adds that Black Friday is historically Target's busiest shopping day of the year. Stores will have extended hours Friday. And the discounts won't end then.

"The promotions we offer are available all day Friday and all day Saturday," Thomas said.

But in the end, whatever happens on Black Friday, consultant Howard Davidowitz said retailers will continue to struggle for the foreseeable future.

"Bankruptcies are going to continue," Davidowitz said. "Store closings are going to explode. We're in a terrible place."