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U.S. retail's Black Friday crosses the border into Canada

Shoppers walk past a Black Friday sale sign hanging in the window of H&M clothing store on Bloor Street in Toronto.

Deborah Baic/The Globe and Mail

Black Friday is going mainstream in Canada.

As domestic merchants feel more pressure to lure cautious consumers, they're stepping up the deep discounting tied to the U.S. Thanksgiving holiday, which falls on Thursday.

The price-slashing is now so widespread among domestic retailers that even luxury purveyor Holt Renfrew & Co. trumpets a four-day Black Friday event. "If Holt's is doing Black Friday, then I would say it's reached critical mass," said Michael DeSimone, chief executive of Borderfree, the web business that facilitates cross-border online shopping at such large U.S. retailers as Saks Fifth Avenue, Macy's, Nieman Marcus and J. Crew.

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A raft of other retailers are joining in. Canadian Tire Corp., for example, will hold a "Red Thursday" event to kick off its four-day Black Friday sale, which it touts as having its deepest discounts. "This is a big sale for us and it's something our customers have come to expect," said T.J. Flood, senior vice-president of marketing at Canadian Tire.

This is the first year Canadian Tire is actually calling its Black Friday sales by that name – last year, for example, it marketed its sale as the "our lowest prices of the year."

"We definitely see a spike in performance during this weekend," Mr. Flood said, although he did not provide data.

Black Friday bargains, the U.S. equivalent of Canada's Boxing Day sales, began to creep north of the border during the recession, as retailers attempted to draw in shoppers during difficult times. As the economic recovery slowly bumps along, merchants are continuing to tap into Black Friday marketing to stem the flow of cross-border shopping and get consumers into the holiday spending mood.

Domestic retailers have good reason to introduce their own Black Friday deals – cross-border shopping represents a real threat. In 2012, Canadian sales at Borderfree's U.S. retailers nearly doubled from the previous year during the four days from Black Friday to Cyber Monday (an online event that occurs the following Monday) from a year earlier, according to company data. Cross-border shopping drains more than $20-billion a year from the Canadian economy, BMO Nesbitt Burns has estimated.

Shoppers seem to be responding. In a recent survey by Accenture, 64 per cent of consumers in the Toronto area said they were very or somewhat likely to shop on Black Friday, compared with 50 per cent a year earlier.

"The long-term viability of Boxing Day is going to diminish over time," Michael Mulvey, marketing professor at the University of Ottawa's Telfer School of Management, said. "Black Friday and Cyber Monday have become more entrenched here."

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Electronics chain Best Buy Canada, which has run Black Friday sales for five years, will feature twice the number of discounted products this year, compared with 2012. "It certainly has become mainstream," Robert Pearson, the company's vice-president of e-commerce, said.

Last year, traffic to the web sites of Best Buy and its sister Future Shop chains jumped 50 per cent on the days between Black Friday and Cyber Monday, he said. The chain expects traffic to rise more than 25 per cent over the same period this year.

Liz Rodbell, president of Hudson's Bay, said it tested Black Friday waters last year and "we anticipate this year to be even bigger. Our marketing and promotions have expanded and we think there is strong opportunity to significantly increase volume this year."

To ensure consumers have time to shop – since Friday isn't a holiday – malls and chains will open their stores earlier than usual. Some retailers, such as, started touting Black Friday deals at the beginning of the week.

Retailers are looking for a boost. Total retail sales this holiday will rise about 2.5 per cent, excluding the auto sector, according to a forecast by retail consultant Ed Strapagiel. While the growth will be relatively modest, it will still be significantly better than last year's 0.1 per cent decline, excluding automotive, he said.

But retailers this year face tougher competition, including the arrival of U.S. discounter Target Corp. and its 124 stores and the expansion of arch-rival Wal-Mart Canada Corp. "As a result, retailers are starting earlier, promoting harder and discounting deeper, all of which sets up the right conditions for margin massacre," Mr. Strapagiel said.

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About the Author
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More


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