In the last decade, Black Friday has become a global retail phenomenon stretching to China and India. But back in the U.S. where it began, it’s not the retail holiday bonus it once was. Shoppers are turning online for the doorbuster deals they used to camp out at the mall to snare. Some stores have launched seasonal promotions well before families gather for their turkey dinner. Now, stores have competition from Instagram, which allows people to shop from the app. That means, retailers must innovate and execute at their best for longer and in more places to get their share of people’s wallets.
For traditionalists, Black Friday is still the official kick-off for holiday purchases. Yet how they shop has changed. This year, 38 percent of Americans say they will shop on Black Friday, according to a new Ipsos poll for Reuters. That’s about the same amount of people as in 2012. What’s different is this year, 37 percent of people plan to buy only or mainly online. It was 18 percent in 2012.
It’s changed for stores, too. Black Friday sales formerly accounted for up to half of annual sales. For most retailers, it now represents only a fifth to a third. Several factors have diluted the day’s significance, wrote Ipsos Director of Retail Intelligence Tim Denison in a whitepaper. They include the single day event blurring into a multi-day one and the rise of online and comprehensive “omnichannel” sales. Also, everyday promotions and an influx of discounters have leached the sense of exclusivity from the day. Then there’s Amazon.com. Its 36-hour Prime Day event in 2018, was the biggest sales “day” in the company’s history, besting its Black Friday, Cyber Monday and Prime Day 2017 sales.
Even Wall Street analysts are less dependent on Black Friday for their retail stock forecasts. “I’ll get a lot more sleep this weekend than I used to,” says Simeon Siegel, senior retail analyst for Nomura / Instinet Equity Research in New York. He says the November to December holiday period is critical and retailers still need to bring their A-game for Black Friday. But it gets harder for retailers as selling expenses stretch for longer periods.
“It’s much easier to plan for a hectic, but focused, few hours than for a few months,” he says. “When the holiday season stretches into months, deciding how to price products, display merchandise, forecast inventory, and account for labor and fulfillment costs is a much more difficult equation. When there is that much time, you can become your own worst enemy, second-guessing your chances at success and undermining your own promotional plans.”
It’s time to rethink the shopping season
So, who is most at risk in this new environment? How should retailers shift from outmoded Black Friday thinking?
Retailers that don’t have a strong online presence are not just losing on Black Friday but across the year. Similarly, retailers that have poor digital marketing are at risk. They’re going to lose because email replaced direct mail and banner and search ads replaced newspaper circulars to drive customers to retailers.
Shoppers increasingly buy online and pick up their purchases in stores or have them delivered in a day or two. In turn, retailers need to be sure their supply chain and e-commerce can efficiently support those kinds of instant-gratification transactions.
That doesn’t mean retailers can win with just deals in their physical stores. More people are expecting to be dazzled when they venture out to the mall or Main Street. When they go to Bass Pro Shops, they don’t want to just to buy a fishing rod in the store. They’re expecting to be able to fish in the store.
If retailers aren’t creating that high-end experience, they’ll need compete on price with the likes of Walmart and Amazon. That can kill margins. Amazon further raised the stakes for other retailers by installing pop-up stores where every product rates four stars or higher at Amazon.com. Meanwhile, Google is expanding their stores-within-a-store at Best Buy to better demonstrate smart home products. Both are hitting on all fronts of physical and online retail.
If merchants and brands want to have a great year, they need to rely less on the holiday bonus of Black Friday and more on great retailing year-round.