Retail Weekend: Penney's Shines, Wal-Mart Weak

The weekend after Thanksgiving is usually a big one for retailers. Host Madeleine Brand talks to retail analyst Howard Davidowitz about how this weekend turned out for big retailers, and whether online sales will continue to grow this year.

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MADELEINE BRAND, host:

The mall is back. That's the consensus among retail experts after analyzing the first holiday shopping weekend of the year. Thanks to early openings and deep discounts, stores like J.C. Penney did a lot better than last year. Wal-Mart, however, did worse.

Retail analyst Howard Davidowitz joins us from his office in New York to fill in the details.

Hi, Howard.

Mr. HOWARD DAVIDOWITZ (Retail Analyst): Hi.

BRAND: The analysts at ShopperTrak found that sales at mall stores for so-called Black Friday, the Friday after Thanksgiving, rose about six percent from last year. So that's good news for them. What's attracting shoppers to the malls this year?

Mr. DAVIDOWITZ: I think that some of the hottest chains are in the malls. For example, J.C. Penney is on fire, doing a tremendous job, and they are an anchor in a mall. Also, the mall participated in Midnight Madness, opened earlier. So the numbers are not really comparable. They spent so much more money on labor to do the business. We're not comparing apples and apples, but malls did okay. I don't think they did as well as ShopperTrak said, but they did okay.

BRAND: Right. But Wal-Mart did worse, even though the mall stores, like J.C. Penney, took a page out of their playbook by opening earlier and offering deep discounts.

Mr. DAVIDOWITZ: Well, you got to look at the top three retailers. Wal-Mart did terrible, Home Depot did terrible, and Sears did terrible. Wal-Mart itself is nine percent of retail sales. Why did Wal-Mart do worse? Number one: Wal-Mart had massive door busters, people charged into the stores in droves. Guess what? They only bought the flat screen TV. They only bought the door busters and they left with that. The idea of a door buster is to get the customer in and have him shop the whole store and pick up impulse items did not happen.

Home Depot was in a train wreck because of residential housing, and Sears was totally off track in merchandizing. And Sears is in the same malls as Penney's. So I see a very mixed bag. Wal-Mart drove their price down so low, they couldn't make up the dollar sales, even though they did more units. They're just in a bad place with their consumer.

BRAND: Howard, I want to pick up on something you said about Home Depot. How is the slowdown in the housing market affecting retail sales?

Mr. DAVIDOWITZ: Terrible. In the last few years, Americans took $2 trillion out of their houses in re-financings and spent it on flat screens, furs, and everything imaginable. They can no longer do that because of the collapse of equity values in their house. Seventy percent of Americans own a house and it's by far their largest single asset. They've been using it as a piggybank. That is no longer available.

BRAND: Let's talk about today. This day is known as Cyber Monday, when everyone goes back to work and instead of working, they're online, shopping. Is this a big indicator of retail sales?

Mr. DAVIDOWITZ: I am very optimistic about online sales. I think online sales are going to be explosive and continue to grow well into double digits. I just think the convenience element, the ability to check prices, are just incredible, and free delivery. That combination is terrific. As far as the Cyber Monday, I buy that online sales are going to be great. I don't buy into the Cyber Monday idea, because the online sellers have improved their ability to deliver so much, there's no need to buy this early. But I do think online sales are going to be on fire, as are luxury sales are going to be very, very strong.

BRAND: Retail analyst Howard Davidowitz, thanks again.

Mr. DAVIDOWITZ: Thanks for inviting me.

BRAND: Stay with us on DAY TO DAY from NPR News.

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