Why Technology Has Made Black Friday Irrelevant
I have fond memories of Black Friday, back in the days before ridiculous doorbusters at ridiculous hours meant risking life and limb. Back when Black Friday deals would be magically revealed in the Thursday newspaper, and my mom and I would spend the evening sifting through the circulars, planning our attack, while "the men" watched football or snoozed in turkey-induced comas in front of the TV. My mom and I would have a great time, heading out to shop, spend some quality mother/daughter time together, have a nice lunch, and head back home. I don't remember any urgency to the day. I do remember getting a chance to maximize a high schooler's and then college kid's measly Christmas budget on some Black Friday deals.
I contrast this experience with the last two years--this Black Friday, and the year before, when there seemed to be an underlying desperation involved in Black Friday shopping. As if Christmas wouldn't even be possible without the doorbusters, so that otherwise civilized people stood on line for hours and hours on an otherwise family holiday, just to shove each other out of the way for the ridiculous price on a TV or an Xbox, or a smartphone. Some people seem to view the long lines and crowds as proof that Americans enjoy Black Friday. That the holiday is more successful than ever.
I completely disagree. I think what we are seeing is the last gasp of an old, store-based model, which is putting up a fight, no doubt, but will ultimately be determined to be completely irrelevant. In order to follow the argument, let me start by giving you my perspective as an industry analyst as to what Black Friday really is. To me, Black Friday is the result of the following retailer thought process:
- No matter what, consumers have a budget in mind when it comes to the holidays, and while you might get them to go over budget slightly, you still basically only have one shot at getting their spend, because once the money is gone, it's gone.
- In a store-based world, the best way to get that spend is to get shoppers into the store. Once you get them there, you now have the best possible chance at capturing a significant portion of their spend before they leave the store, ideally on some of the higher margin things that you'll need to sell in order to offset the no- or negative-margin doorbusters. Thus, Black Friday deals.
- In an opaque world, the best way to get consumers into stores is to spring the deals on them the day before, so that you've created a sense of urgency, and you've additionally done so when shoppers don't really have the time or the information available to them to make rational decisions about which doorbusters they really want to get - i.e., "Yeah, Best Buy has all these doorbusters on TV's, but I have no idea which one I really want until I get there and see it for myself - maybe talk to a store associate to help me figure it out."
Let me address each of these in reverse order:
Consumers now have more information available to them to make product decisions than ever before.
So they don't need to go to a store to decide which one they want, and they certainly don't need a store associate to help them figure it out. The idea of blasting people with a last minute reveal of deals no longer pans out. Sure, you get long lines. But if even one-third of those people are like my friend Marisa, who is a consummate Black Friday shopper (yes, she did go out on Thanksgiving night - more on that in a minute), all you've done is lined up all your cherry-pickers in front of the store.
Marisa's typical plan of attack goes like this: review all the online information about the deals and the products, select which deals she really wants, prioritize store visits according to some internal math that takes into account driving distance, store hours, perceived scarcity of the deal, and depth of the discount, and then visits each store in order, checking off the items on her list as she goes. My guess is that any retailer that gets her in the door gets about $20 of incremental spend over the doorbuster deals she already has on her list, and that's about it.
There is total price transparency on Black Friday deals.
Personally, I had two big-ticket items that I knew I had a chance of getting a big discount on due to Black Friday. They were a vacuum cleaner (yes, my husband and I have been married for seventeen years and this is the present we're getting for ourselves. But it's a really sweet vacuum), and a blu-ray DVD player. But instead of looking at the deals and deciding which brand I was interested in, I selected my products and then went in search of the best price, a practice I find on the rise in general. And I found, the week before Black Friday, that for both items, Black Friday wasn't going to beat the current deals.
The only way I could get a better price on the DVD player was to get a different one - and I couldn't help but notice that all the doorbuster DVD players tended to have really low ratings online. While I could get a DVD player for half as much as what the one I wanted cost, it was also about half as good (or worse) - so not really worth it, in the end.
So that whole idea of springing great deals that drive traffic to stores where shoppers will ultimately spend more to make up the margin difference on those traffic drivers? I think it's done.
Black Friday is no longer the official start to the holiday shopping season.
Black Friday has been starting earlier and earlier in some Cold War-like race to capture shoppers, culminating this year with Walmart and Target especially encroaching on the last sacred, relatively non-commercial American holiday, Thanksgiving. But I counted no less than two dozen offers that promised me Black Friday prices - or better - long before Black Friday showed up on my calendar. And thanks to sites like BlackFriday.com, where I could verify it against the leaked Black Friday deals, I believed them. The only way I'm going to get better prices this holiday season is if shoppers hang on to their money and retailers panic and massively discount closer to the holiday. Some things I can wait to get, biding my time, if I so desired. Others I know will be scarcer, so if I can get a great price before even braving Black Friday crowds, then why wait? To me, that says that Black Friday is already irrelevant.
Any proof to my suppositions? Well, first, you should wait and see - Steve and I are working on a social listening project with SAP that I hope will tell us a couple of things: do shoppers really actually "love" Black Friday, or do they tolerate it because the prices are too good to resist? (hint: I think the answer is the latter) Will the retailers who opened on Thanksgiving Day have bought themselves good will and positive customer sentiment through the practice? (hint: I'm not a betting woman, but I'll bet you the answer is no). We should have the first pass of that analysis out by Wednesday.
Second, I have some interesting numbers from Chase's Holiday Pulse. They report that Thanksgiving Day sales are up 70.8% year over year, thanks in large part to some stores being open Thursday night. But on Black Friday, overall sales dropped 7.8% year over year, even though eCommerce sales were up 15.2% on that day. In their press release on the results, they report that for the entire Thanksgiving week, overall sales are up 2%, less than what the NRF predicts as the overall spending rise on the season.
So, what did retailers gain by being open Thanksgiving Day? Did they drive the traffic to their stores that resulted in the same tried and true formula to capture consumer holiday spend? ShopperTrak reports that foot traffic rose 3.5% on Black Friday, vs. a 4.7% increase in 2011. But they report that sales are down - decreasing 1.8% vs. Black Friday spend in 2011, which they attribute to some of the spend shifting to Thanksgiving Day. The net result, from where I'm sitting: No appreciable difference in traffic or spend, but now spread across a more expensive labor base (holiday pay, anyone?) and with potentially a hit to consumer good will - and certainly, to employee good will.
Black Friday isn't really dead - the lines prove that. I don't think it will die in my lifetime. My friend Marisa happily waited in line at Target at 8:45pm Thursday night, got in the store at 9:15pm, and got out by 10pm. She brought her son with her. She got her specific deals, like $5 pajama sets for her kids. Her son (one of four kids) spent some of his money on a gift for his sister. They bought some hot chocolate from Starbucks and spent some quality time together, and enjoyed a relatively festive mood among the crowds at the store. For as many stores that made it on YouTube with images of the desperate crush of humanity clawing at each other for some Xbox games, I offer you that contrasting view of mother and son, enjoying some time together - I hope it's an enduring one as far as Black Friday goes.
But as for the day's importance to retailers, I think we are witnessing the death throes of an old way of thinking. Black Friday is already dead. We just don't know it yet.