Black Friday — Still Relevant or Just Day 332 of 365 Daily Sales Promotions?
Long a critical day for retailers, Black Friday appears to be becoming increasingly irrelevant as promotional event day due to changing shopper behavior driven by digital, extended shopping hours and “sale” fatigue for consumers. Reuters reported shoppers had no trouble finding parking or navigating crowds on Black Friday as many retailers opened Thanksgiving evening and shoppers increased online spending. Black Friday has become a microcosm for the reality facing the retail industry as shopper’s path to purchase fragments and competition for shopper attention intensifies.
At the Mall at Millenia in Orlando, the crowds were heavy but not more than a typical busy day said several store associates. Most of the sales had been active for weeks or in the case of many retailers like Macy’s, just a run on string of sales that occur on a weekly basis. There appears to be a divide developing between strong differentiated retail and middle-market competitors competing with each other (and increasingly their suppliers) with similar goods. Predictably, profits get squeezed as consumers use digital not only to shop but to easily compare prices, find deals and warehouse their shopping lists to suit their needs. This is the fundamental challenge for all retailers as traditional price based promotions erode brand value and aggregators such as Google step in to simplify the digital shopping process for consumers.
My inbox mimics the raft of window signs screaming at consumers. Everyone has a deal for me and is constantly reminding me of how good those deals are. Once again, technology has made it easy for me to manage the onslaught of messaging as gmail simply rolls these messages up into a promotional tab (which brands can also advertise against). Over the course of the past week, Sunglass Hut has sent me 10 individual emails about amazing deals on expensive sunglasses. Consumers can shop digital anytime and have become savvy for out-waiting retailers to drop prices even further in margin-destroying price cuts. This is especially acute in middle market that must resort to ever increasing amounts of reach to achieve results which in turn creates more noise in the system. This results in what I refer to as the “Delivery Pizza Problem” for retailers. They have trained me to not pay full price, ever! The product is on sale constantly so consumers are trained in a brand destroying litany of promotional messaging. I not sure that I’ve ever gotten any branded messages from sunglass hut about great styles or fashion inspiration, but rather, these Prada’s are on sale! I know…Many great retail brands will be destroyed in this process as they become irrelevant and brands offering great products and services vs. constant sales will thrive.
Initial Black Friday reports are showing a decline in store foot traffic for most retailers resulting in over $1bn in sales moving online or to other days. While many omni-channel retailers have seen significant increases in online sales, the gains are far from replacing in-store traffic. Ecommerce for Walmart for instance accounts for less than 3% of its overall revenue. Even a 20% online gain would not come close to making up for a 1% decline in store traffic. Wall Street has finally come to grips with this shifting consumer behavior crushing the stocks of terrestrial retailers while driving up digital pure-plays despite lack of profits. The long game is efficient online retail, physical retail as we know it, is over.
So what’s to become of Black Friday, not to mention Sloth Sunday, Cyber Monday etc.? Probably not much, it’s just another day of sales. As digital retail becomes more seamlessly integrated into consumers lives, its likely that specific sales events or days will fade in importance. This will be exacerbated as the cacophony of promotional messaging gets squelched by digital filters and consumers tune into products and services on their timeframe and choosing.
Shopping is becoming all about context, think of it as video on demand for shopping.