By Dan Orlando
The National Retail Federation reports that the annual shopping surge between Thanksgiving and the weekend that follows lacked a bit of its punch this season, with sales for the period finishing down 11 percent at $50.9B as opposed to 2013’s $57.4B.
The decline is not promising, especially during a year that saw retail rents on a prime Manhattan corridor such as Fifth Avenue reach record highs.
New York’s retail market has generally urged that online shopping’s presence did not pose a serious threat to the practice of maintaining physical storefronts in the boroughs. Despite the disappointing numbers, 2014’s Black Friday did little to weaken that contention.
The average amount spent per person online across the nation sloped down as well by over 10 percent this season, landing at just under $160.
This dip is included in the overall 11 percent drop of retail receipts, which suggests that the lack of spending does not stem from a desire to avoid the hassle of fighting crowds and standing in lines.
“Black Friday shows that people still want the most for their money,” Douglas Elliman retail chair, Faith Hope Consolo told Real Estate Weekly.
Consolo contends that the more subdued Black Friday numbers are merely a result of a stabilizing American economy, which is restocked with families wielding disposable income instead of a desperate need to find the best deals.
“Shoppers at all price points remain concerned with quality and value,” she said. “But the reduced frenzy shows that they are a bit more comfortable with their own situations and the economy overall.
“Saving money is certainly desirable but less of an absolute necessity as more people are working and are more optimistic.”
“Herald Square clearly had a great holiday as Macy’s reported good results,” added Consolo. “The luxury areas probably lagged a bit as that shopper is less driven by the Black Friday bargains. Many may even have been away.”
Patrick Breslin, executive managing director for global retail at Colliers disagreed with his colleague’s optimism.
Breslin said that the retail real estate market should still be a bit concerned with the declining sales figures, even if the numbers affected digital shopping as well.
“Because Thanksgiving was so late in the month this year, it shrunk down the actual time between Thanksgiving and Christmas,” said Breslin, referencing the past two years have seen the holiday come about three days later than 2011 or 2012.
“Three days is 10 percent, that’s probably pretty significant in a retailer’s eye.”
Breslin argued that bargains aside, stores needed to see big numbers in a more condensed window this holiday season.
“How can you pay rent at $3,000 sf and still make money? That’s where the marketing and the advertising budgets come into play,” said Breslin. “They’re taking away from marketing and advertising to help pay rents.”
Breslin pointed out that stores that chose to forgo physical locations, especially in high rent areas such as New York City, can better weather dips in sales revenues — such as this past Friday’s stutter — because they are saving on sales staff and other automations.
“I think that the technology part of the real estate, without the brick and mortars, for retailers, it’s got to be cheaper,” said Breslin, suggesting that even major brands will have to at least consider removing high priced storefronts from their strategies.
“I think retailers are looking at a way to save money and maybe online is a way to save operating costs,” he said.”