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How Black Friday Lost its Mojo

Geplaatst op dec 5, 2013 in News

Black Friday 2013 turned out to be, well, a bit more like a Grey Friday. The National Retail Federation estimates that consumers spent $57.4B over the four-day Thanksgiving holiday weekend, a 2.7% drop from last year’s $59.1B shopping spree. This slide in sales is causing anxiety about the economic recovery possibly sputtering.

But retailers should forget about drawing conclusions based on Black Friday purchases.  As a sales event and barometer of consumers’ fiscal health, this former indicator of holiday sales is losing relevance.

Last weekend’s sales drop shouldn’t be shocking –customers are simply shifting more shopping to the web. This results in a substitution effect: fewer sales on Black Friday and more on Cyber Monday. In contrast with the tepid Thanksgiving weekend brick-and-mortar numbers, IBM estimates that sales on Cyber Monday jumped by 21%. It’s not a big stretch to predict that buying on Cyber Monday will increase next year too, again at the expense of Black Friday.

While the rising popularity of Cyber Monday is one reason for Black Friday’s poor showing this year, another reason can be squarely laid on the doorsteps of brick-and-mortar stores themselves. They made the mistake of thinking that more was the same as better. This year, with Thanksgiving being so late on the calendar, U.S. stores started their “Black Friday” sales days or even weeks ahead of the actual Black Friday Some, such as Hugo Boss, hosted brief “private sales” claiming to offer the same discounts that would be available on Black Friday. Why fight the crowds if the same discounts can be garnered a few weeks earlier? These early sales caused yet another substitution effect – they siphoned off Black Friday purchases.

I’m reminded of some close friends of mine who host an annual, no-holds barred summer party. It’s a great party and because of its success, this year they decided to make it a three-day celebration. The idea sounded great in theory (more party! More friends! More food!)  but it didn’t work out well in practice. While everyone was happy to see each other on Day 1, we all held back because we knew there were two more days to enjoy. Then by the time Day 3 rolled around, everyone was just tired. Spreading out the fun over three days had not resulted in more net fun — just fun diluted.

Similarly, retailers’ extended sales have dimmed the excitement of shopping on Black Friday – the chum that used to incite buying frenzies at malls. It’s hard to get jazzed about the Black Friday sale of “30% off everything in the store” at Ralph Lauren Outlet stores, for instance, when that sale had already been running for at least a week. This ho-hum shopping experience ushered customers home from the mall early.

But does it matter if Black Friday fades if the shopping season gets peanut-buttered around over several other days? I think it does. One side effect of all of this discount jockeying is that customers lose a call to action. In past years, shoppers could be confident that Black Friday deals were likely to be the best of the season. But this isn’t the case anymore. Dire discounts and once-taboo discussions over how early to open on Thanksgiving revealed that retailers are hungry. Rather than marking the starting point of the shopping season and the best deals of the year, this year Black Friday marked a “meh” sort of midpoint to a season that many consumers believe will yield better discounts by year-end.

Will retailers change their ways after learning this year that more is not better? Probably not. Retailers are now stuck in a discounting prisoner’s dilemma. It’s in the best interests of retailers to return to the practice of making Black Friday weekend a once a year blow-out event that provides the best discounts and generates purchase-propelling excitement. However, each retailer also has an incentive to “cheat” by offering discounts in advance. As a result, while Black Friday weekend will always be an important sales weekend for retailers, its mojo is fading.

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