Black Friday is an inarguably important day to retailers, kicking off the holiday shopping season and an inevitability high selling period that most retailers depend on. But as many retailers experienced in 2013, the promotional pressure on brick-and-mortar stores and continued shift to ecommerce shopping has outweighed the increase in sheer sales volume. While shoppers came out in droves to stock up on best-of-the-season prices on certain items, it was evident in other areas that consumers are employing a “wait and see” approach in hopes of deeper discounts closer to the holiday.  

While specific retail sales numbers are yet to be seen, key metrics from this year’s Black Friday performance include:

• Shoppers resisted Thanksgiving and Black Friday deals: Sales at brick-and-mortar retail stores totaled about $12.29 billion, down 0.5 percent from the two-day period in 2013, according to estimates by ShopperTrak. Additionally, the National Retail Federation reported that for the full holiday shopping weekend, overall shopper traffic dropped 5.2 percent.
• A cautious approach to spending: The NRF also reported that shoppers held back on spending, with the average person who shopped over the holiday weekend spending $380.95, down 6.4 percent from $407.02 in 2013.

The shift to online sales continues: Online sales, tracked by Adobe Systems Inc., hit an all-time high, rising 25 percent and 24 percent on Thanksgiving and Black Friday, respectively.

Though we expect value-oriented retailers such as warehouse clubs, and niche retailers such as high end luxury brands, will do well as the season progresses, we also expect to see challenges for those that fall in between. As consumers constantly shift their behavior to maximize the benefit they get out of every dollar, retailers must shift their behavior as well to focus on managing inventory and balance sheets.

The veteran team at Salus Capital Partners, steeped in retail industry experience, understands the nuances and challenges facing retailers, from product sourcing to inventory management to distribution. And while a number of retailers have prepared for the holiday season with a cautiously optimistic outlook, many more need to focus on positioning themselves within the marketplace by preparing their balance sheets to have enough working capital. We have the retail expertise and ability to structure customized credit facilities that maximize liquidity to help those retailers weather the holiday shopping season.
 
Salus Capital is a direct originator of secured asset-based loans to the middle market across a variety of industries with additional complementary financing throughout the capital structure. Target transaction sizes range from $5 million to $50 million, with the ability to hold up to $100 million and to syndicate larger transactions. The Salus Capital platform may also serve as an asset manager for like-minded institutional investors such as community and regional banks, insurance companies, family offices, private equity funds and hedge funds who may lack the infrastructure and dedicated competency within senior secured lending.