One Minute Past Thanksgiving
It’s the annual ritual. The day after Thanksgiving and crowds of frenzied customers are captured on the local and national news waiting to bust through some retailer’s door as part of the official kickoff for the retailing holiday season.
Last year, according to BIGresearch, 60 million consumers went shopping on Black Friday. That number was eight percent higher than the same day a year earlier.
The competition to capture headlines and outdo the competition on Black Friday seems to become more intense each year. Some retailers looking for a fast start out of the gate aren’t even waiting for Friday, with store hours on Thanksgiving Day itself.
For others, getting an early start on Black Friday is the way to go. That’s why an increasing number of stores and malls are opening for business at midnight.
“Retailers are trying to figure out a way to bring back some luster to Black Friday because it has been a disappointment in recent years,” said Jay McIntosh, director of consumer products for Ernst & Young. “We’ve seen a movement toward [midnight openings] across the country among malls and retailers. Much of retail is about creating an event, and that’s probably what they’re trying to do.”
Michele Rothstein, senior vice president of marketing for Chelsea Property Group, which owns North Georgia Premium Outlets, said, “We’re opening at midnight because of customer demand. We opened at 7 a.m. for years, and shoppers would show up early. Then we opened at 5, and shoppers would show up at 4. They just keep coming earlier and earlier.”
Discussion Questions: How important is Black Friday to retailers? What does a strong opening day and weekend to the holiday season mean for a retailer’s
business during the November to January selling period?
I’ve been in stores on Black Friday as a retailer and a consumer and the feeding frenzy has to be felt to really be understood. Many of these shoppers are not frustrated by long lines or 4AM openings, rather they go for the thrill of the snagging the best bargain or newest item. The excitement is covered in newspapers and local TV stations all weekend. The television coverage and neighborhood van pooling from word of mouth to hit the best stores, has additional marketing value for the Friday winners.
The consumer has a hypothetical “$100 or an hour” for shopping and whichever runs out first, they are done. Taking as much of their time and money out of the Christmas season on Black Friday, before they shop the competition, is used as a defensive as well as offensive marketing strategy by participating retailers. The marketing value of the event has to be taken into account when reviewing profitability. Those retailers opening early with 200 to 300 customers and TV cameras at the door are probably gaining for the season. Those retailers that chose Black Friday items poorly, lose. The more unique and upscale the retailer, the less you need to play this particular game.
Black Friday may set a tone, but it certainly has become less important due to many factors, the largest being that retailers have just plain become irresponsible. If anything, it has given retailing a bad name.
The comments that the ridiculousness of it all is a result of consumer demand is simply hogwash. It’s retailer-caused– period.
Consumers have far too many choices being made available to them this year to almost even take this particular day seriously. Advertising and marketing may set a tone for price image and message. Yet, in doing so, the retailers have undercut themselves and credibility with the consumer for the entire season. In recent years, I believe we have seen this evident in the delay in sales. This is particularly evident as a result of gift cards, but it is also a result of retailer behavior. Retailer behavior trains consumers. They are pretty smart as a result and are learning more and more about their choices yielding this day of less import each year.
Go on, go crazy, but the consumers are learning. There are a few that will make the day for you, yet far more are skipping the day entirely. In many cases simply for their own safety. I don’t blame them.
There is an underlying assumption in this topic that may be leading us all astray. The underlying assumption seems to be: “Stores create a selling atmosphere on Black Friday that determines, at least a little, the sales through the rest of the year.”
Are retail’s Black Friday promotions the CAUSE of the overall holiday sales pattern or a result of it? Are consumers put into a stronger “spend” behavior by retailers’ Black Friday promotions, which causes consumers to spend more through the season, or are consumers put into the behavior by other factors not under the control of retailers, and then spend more on Black Friday and the rest of the season no matter what retailers do? Before you laugh me out the door, consider how little information we have to prove or disprove our usual assumption. This may explain why some years, heavy promotions lead to higher Black Friday numbers and higher holiday sales, and some years they do not. If promotions created the sales behavior, this would not be the case.
It is quite logical, then, that we are fooling ourselves to think that, in the big picture, the never-ending promotion parade of Black Friday really matters. To a particular retailer, it is probably a factor, but in the overall retail economy, not necessarily. I’m not suggesting that a particular retailer stop. I’m just suggesting that the retail and media focus on Black Friday may be mis-spent energy that doesn’t contribute to our learning.
Black Friday is as much a sporting event as the football games on Thanksgiving Day. It’s an iconic annual ritual that’s become a national pastime.
The Black Friday shopping event sets the national tone for the traditional Christmas season. (And yes, I said Christmas. At least 85% of Americans recognize and celebrate it although retailers are now afraid to acknowledge it, but that’s another discussion.)
The consumer puts similar preparation into Black Friday Game Day by mapping out the game plan, knowing who’s playing, and the exact minute of kick-off time. Adding kick-off at midnight just increases the options.
The great part for retailers is that once the Black Friday event is over, the consumer trend is now to return home to their catalogs and email blasts to go after the items on their shopping lists not checked off by the sale events.
The 2006 season, like the 2005 season, will have four, count ’em four Black Monday’s for online & catalog shoppers. This is where it gets fun. Customers can shop online with most e-tailers as late as December 21st for overnight delivery on the 22nd and THEN, send e-Gift Certificates for instant delivery for those ultra-last minute gifts.
Then the post-Christmas return/exchange and cash-in-the-gift-certificate event begins on the 26th. What a country!
As long as Wall Street thinks it’s an important indicator for the season’s sales (and analysts do think this way), it will remain important to publicly-traded retailers. Black Friday is also important for suppliers of gifts, especially toys. If Wal-Mart and Toys R Us sell more of a line than expected, it means the suppliers have to get their supply chains humming. If they sell fewer than expected, suppliers may pull the bonuses of certain managers.
“Black Friday” has become a media event for its own sake. In every city in the country, the local media send traffic copters over the malls and send teams of reporters to stores on what is otherwise (hopefully) a slow news day. It’s become as predictable a ritual as the news coverage of the last post office opened on April 15th.
The media hype has risen even as the importance of the day itself to the total holiday season has diminished over the past several years. Regardless, “Black Friday” means a lot for the following reasons:
-It is still a huge volume day for most retailers, especially those who work hard to compete on early birds, doorbusters, and so on;
-In a retail environment where market share is the game, getting those customers into your store first still matters;
-Stores who are nimble enough to react on merchandise content and promotional pricing before December 15th can learn a lot from “Black Friday”;
-The day creates the kind of momentum (and sense of “winners & losers”) that retail organizations feed upon as they push toward the goal of strong holiday sales.
Black Friday is the “monkey on the back” of nearly every major retailer.
From an accounting perspective, it is questionable as to whether it is worth the added payroll, logistics costs, promotional dollars and planning that are spent in preparing for and supporting this increasingly competitive day.
There may have been a time when this day truly lived up to its reputation as being “black” in the sense of its ability to bring profitability. I am not so sure it rings true today. Retailers have been driven to ever increasingly creative ways to try and herd the shoppers into their store environments in order to capture as many of their dollars and feet as possible.
The competition for the feet include door busting low price loss leaders, hot and hard to get items, early bird shopping specials, early openings and so on and so on. Now we are hearing that those stores not traditionally 24 hour stores are opening at midnight!
Yet, in the end, is it profitable? Does it build momentum? Is it good for the customers?
The customers absolutely win and in fact it has been a “buyers market” for many years now as the customers continue to reap the benefits of ever lower prices on both high and low end products as the competition amongst retailers grows ever more fierce.
I believe that it is marginally profitable for retailers and that the momentum built would be a “street” momentum affecting the stock price based upon the analysts evaluation and emotional assessment of their comp sales report and the ensuing national media frenzy proclaiming the “winners” and the “losers.”
It is truly a “habit” that has been impossible for retailers to break and it doesn’t look like they’ll be rid of this monkey on their backs anytime soon. If anything has the power to change this day it will be the impact of online shopping and retailing which may over time actually result in a decrease in traffic at the bricks & mortars.
In the grand scheme, Black Friday is not that important, however, it does set the trend and allows a retailer to generate a lot of buzz if it goes well. The problem is, every retailer tries to over-emphasize every price-point and it gets the whole season off to a low-margin start. Key is for retailers to emphasize only a few ultra-hot price points to create the buzz and traffic and still be able to maintain overall margin. Buzz and media awareness can be created from a lot of things other than price and maybe a midnight opening is one of those things that creates buzz. I have my doubts, I suspect all it will do is create tired and cranky employees.
Practically speaking, Black Friday is becoming less and less important. The season is starting earlier (esp. catalog/net) and ending later. However, given the psychology of the popular media, the day still has disproportionate weight.
I agree Black Friday is clearly becoming less important. Retailers are being forced into continuing this practice but it is no longer a bellwether for holiday sales. People are simply waiting longer to buy because they know the prices they see on DAT (Day After Thanksgiving) will be significantly reduced as the weeks go on–anywhere from 20-50% lower.
Having said that, I believe DAT is a highly useful promotional tool. It’s the official start of the Christmas season and people are looking for something to do on a day which is basically pretty dull if you’re not working. They visit a few retailers and their names and merchandise selection sticks until they are actually ready to buy.
Black Friday is the cherry-picking festival of the year. Customers know which merchandise is sold at or below cost. Like bats using sonar to navigate in the dark, cherry pickers find the no-profit giveaways immediately.
In olden days, when downtown department stores were Christmas’ headquarters, they used creative window displays and a conversation on Santa’s lap to drive traffic. These publicity tools earned profits, not giveaways.
It takes no creativity to give your profits away and ruin what little customer service is left. If people are lining up at 4 AM because you’re giving stuff away, let those lines be a message: you have a year to plan a profitable, exciting Christmas.