With summertime ads blaring "Black Friday in July" and e-commerce slowly but steadily obliterating the need to shop at stores, it's common to think that the once quintessential post-Thanksgiving sales event has lost its utility.
But, while that famous Friday isn't really just a day anymore, as a concept it remains crucial for retailers. The holiday quarter is the industry's make-or-break period, when a significant portion of their annual revenue and profits accrue to retailers' balance sheets. It's already a limited window of time, and this year, thanks to a late Thanksgiving, it's shorter than last year's holiday season by six days.
Lucky for retailers, there's Black Friday. The day itself continues to hold meaning for shoppers as the launch of the holiday season. But, more broadly, the concept helps square their focus on which stores have the best deals and the right merchandise — and even the most holiday spirit.
"Black Friday is still one of the most important shopping events of the year for retailers," Michael Brown, a partner in the retail practice of global strategy and management consulting firm A.T. Kearney, told Retail Dive in an interview. "It's an opportunity to capitalize on a population that really doesn't have much else to do for four days. It's a signal that it's time to start shopping."
What the day means
Thanksgiving is late this year — so late that December arrives the Sunday after. That's pressuring retailers and giving renewed prominence not only to Black Friday but also to brick-and-mortar stores because of greater need for instant fulfillment.
"We'll see a lot of activity even the weekend before Black Friday, and that can be disrupted by weather very easily," Brown noted. "Retailers have to do everything they can to capture those dollars now. 'Black Friday' will start on Wednesday of that Thanksgiving weekend. It's also important because of the short shipping season, to take the pressure off of their e-commerce."
More consumers this year appear to have the day in their sights, with some variations among age groups, according to research from The NPD Group. Overall, 17% plan to start holiday shopping on Black Friday itself, "up significantly" from last year, according to an NPD report on holiday purchasing intentions. Even more haven't waited for that weekend, however, according to that research: 5% are already finished, and another 23% already started — both up from last year, NPD found. Amazon may have helped push some of the early birds: some 70% of those shopping Prime Day, which was held in July, said they snagged a holiday gift, according to an October survey by online savings platform RetailMeNot.
The kickoff to shopping seems to depend on how much time and money consumers have on their hands. The older members of Gen Z (who are about 18 to 22 years old) are just starting out as consumers in their own right, and about a third of them will begin shopping on Black Friday, the highest among all age groups, according to another report from NPD. More than 20% of millennials and about a fifth of Gen X plan to start then, NPD found. Nearly 60% of baby boomers planned to start well before Black Friday, more than those in other generations, while 40% of those older than them are putting it off till later in December.
Still about the deals
Black Friday is not just a launching pad, however. In a country where the middle class has been squeezed for decades with little relief in sight, the discounts associated with the red-letter day are almost certainly contributing to its endurance.
These days, it commonly takes two incomes to reach a level of middle-class comfort, and even that is challenged by rising healthcare costs and student debt. Between 2007 and 2017 in the U.S., income growth for those with a mean annual household earnings of more than $100,000 rose a staggering 1,305% more than those with less than $50,000, according to a May report from Deloitte.
No wonder, then, that those outside of that top income tier are keen on discounts. For holiday shopping, 75% of consumers say they expect the best deals of the year around Black Friday and Cyber Monday, according to a study from consulting firm Simon-Kucher & Partners. "Despite its increasing popularity, Amazon Prime Day came in at a distant second with only eight percent of respondents saying they think they get the best deals on that day," said Hubert Paul, director at Simon-Kucher.
Indeed, this year, they appear to be more focused than ever on promotions, possibly because budgets are tighter. Some 30% of consumers said they'll "probably spend less" this year, while just 19% said they'd spend more and a little more than half said they'd spend the same as last year, according to a study from market research firm Colling Media.
But they're expecting steep discounts. Nearly 70% say that in order to make a purchase, they want between 30% and 50% off, according to a survey from global management consulting firm Oliver Wyman. That attitude has already begun to pummel some retailers. Kohl's executives earlier this month told executives that the retailer was forced into steep promotions mid-way through the third quarter, squeezing margins and leading them to soften their expectations for the year.
"We're going to lean in and make the short-term investment in pricing and promotion as we need to," Kohl's CEO Michelle Gass told analysts. "To make sure that we can capture these customers and, importantly, get them on our loyalty ladder for the long-term."
Advantage: stores
Stores may have an advantage this year because the short time between Black Friday and Christmas Day could make some shoppers nervous about getting packages shipped on time. Stores also serve as a marketing tool that spurs online purchases, research has also found.
"Black Friday has moved into Thanksgiving, and become part of the family holiday routine."
Michael Brown
Partner, A.T. Kearney
In any case, a surprising number of consumers seem undeterred by what could be perceived as inconveniences. Nearly 40% of shoppers think Black Friday discounts are worth the crowds and long lines, according to research from performance marketing company Fluent emailed to Retail Dive. And Avionos, a digital commerce and marketing solutions firm, found that 58% of consumers say they're more likely to make impulse purchases in physical stores than shopping online.
That could be because of the way they approach online shopping, with lists in hand and an eye toward efficiency. While some 60% of Black Friday shoppers browse offers for the best deals, 50% of Cyber Monday shoppers focus on finding specific products, according to Simon-Kucher's research.
But it's also because, even with so much emphasis on discounts and must-have items, holiday shopping in stores is more fun, and more conducive to time spent with friends and family, says A.T. Kearney's Brown. "Black Friday has moved into Thanksgiving, and become part of the family holiday routine," he said. "I think it goes beyond the deals. I think people are expecting deals, but it's also about the Macy's parade, Thanksgiving dinner, and people going out together and the thrill of the holiday."
Small Business
via https://www.aiupnow.com
Daphne Howland, Khareem Sudlow
