Old-school retailers struggle to keep up with online surge on busy Black Friday

Black Friday is increasingly an online shopping event, and that’s not necessarily a good thing for legacy retailers, some of which found themselves falling behind during America’s annual spending spree.

Chains have decades of expertise filling stores with mountains of televisions and bathroom towels while coming up with doorbuster deals to lure the masses. But e-commerce isn’t yet the industry’s forte—despite heavy investment and plenty of lip service about how far they’ve come. That was apparent again this holiday weekend as retailers including Lowe’s Cos., Walmart Inc., Lululemon Athletica Inc. and Kohl’s Corp. dealt with glitches and malfunctioning websites—and customer ire.

“It really does show the importance of investing in logistics and technology,” said Marshal Cohen, an analyst at researcher NPD Group. “They have to be able to handle the online rush.”

Big U.S. retailers have cruised for most of this year by posting solid—if not standout—results that lifted expectations heading into what’s supposed to be one of the best holiday-shopping seasons of the past 15 years. But investors became jittery in recent weeks and retail stocks pared gains for the year amid longstanding concerns about how they’ll evolve.

They’ll need to figure it out. The Black Friday numbers suggest a lot of the growth occurred online. According to Adobe Analytics, which is tracking e-commerce, the $6.2 billion spent Friday was 24 percent higher than a year ago.

Foot traffic

There was also plenty of anecdotal evidence that traffic at malls and stores were similar to last year’s levels, if not down for some locations. More than 62 percent of the malls managed by JLL on the East Coast reported the same volume of foot traffic this year as in 2017, though observers said traffic picked up as the cold day warmed up.

“The story for this year is that healthier in-store traffic combined with outstanding digital growth will lead to strong results at many U.S. retailers,” said Oliver Chen, an analyst for Cowen & Co., who said he was most impressed by foot traffic at Walmart and Kohl’s.

Of course, one big caveat for this weekend is that retailers have been spreading out purchases by offering deals earlier in November, and Thanksgiving Day is now a big shopping day in its own right. One estimate by Citigroup said the Black Friday weekend would only make up 10 percent of retail sales in the fourth quarter.

“The frenzy of Black Friday as we knew it is over,” said NPD’s Cohen, who visited stores in four states to start the holiday weekend. “We are watching the next edition of Black Friday, a more civilized and opportunistic edition.”

Luggage, fragrances

Many malls reported a late-arriving crowd on Friday. And shoppers that did show up early were pleasantly surprised by the relative calm. Take Cornelia Baird: The home health aide finished her shopping in less than an hour at Brooklyn’s Atlantic Terminal. The 38-year-old is just the kind of shopper the retail industry is hoping for this holiday season. She doesn’t normally venture out on Black Friday, but couldn’t resist deals on fragrances at Bath & Body Works for $4.95. She then hit Target and bought a five-piece luggage set for $48.

There were also more signs that a big portion of the 164 million Americans expected to shop this weekend were buying for themselves. At a Target in Chicago, 35-year-old Tara James said she came out to get two Phone XS models—one for herself and one for husband—plus the bonus $250 gift card they came with. Other than that, not much else interested her.

“There was nothing for Black Friday that really appealed to me,” said James, who also had run-of-the-mill clementines, deodorant and tights in her shopping cart.

Busier sites

Of course, not all locations looked like just another day at the mall. Thousands of eager shoppers lined up at the entrance of Macy’s Herald Square flagship shop in Manhattan, the largest department store in the U.S., at 5 p.m. on Thanksgiving. The bottom two floors, which sell accessories, cosmetics and shoes, were clogged with customers who struggled to cram on to the few escalators. Macy’s Chief Executive Officer Jeff Gennette was in attendance to cheer on the crowd as they entered.

At Aurora Farms Premium Outlets in Aurora, Ohio, roughly 30 miles southeast of Cleveland, lines formed outside both the Nike outlet and the Kate Spade store.

In a Walmart store in Northern New Jersey, customers sipped free coffee and mapped out their shopping before Black Friday deals began at 6 p.m. on Thanksgiving Day. The stores saw “a pretty consistent flow of customers” through the evening, according to market manager Ashley Viveiros. Electronics and home goods were the two most popular departments early on, she said, with shoppers migrating to the toy department after that.“It’s an event for a lot of people,” she said.

Big sellers

Pressure cooker-style pots had a big year, and despite the decline in cable subscriptions, televisions are still one of the few items that draws crowds on Black Friday. The shoppers at the front of the line outside a Best Buy in downtown Brooklyn had all braved frigid temperatures for one reason: a 55-inch Sharp 4K television on sale for $249.99.

Chris Garcia, a 38-year-old father of four from Brooklyn, got to the store just after 4 a.m. for the opening four hours later hoping to snag that deal for his two youngest children who had recently shattered a set. Saving $200 was enough motivation for the city parks employee to wait in a Black Friday line for the first time. He got so cold at one point that he bought an extra pair of socks at the nearby Old Navy in an attempt to stay warm.

“Usually you’d pay $500 or $600 for a TV like this—can’t pass that up,” Garcia said. This wasn’t a Christmas gift, but it might as well be. Garcia told his family he had to work early on Friday, a ruse so he could surprise them. “I’m just going to walk in with the TV, and see what happens,” Garcia said. “They’ll be happy.”