The start of the holiday shopping season, now defined by Black Friday, is but a few hours away. For many, the whole dynamic of the season has shifted. What once was a family event is being changed from a ‘fun’ experience to price driven ‘consumer combat’ transactions … almost a form of punishment. The ‘gift’ is being defined by the ‘deal’! Shopping is no longer fun!
Last year, Black Friday shopping spend was down 13% from the previous year. Overall, Black Friday Weekend sales were up 3.8% while shopper counts were only up 0.8%, a vast negative shift from previous year trends.
Do retailers need to figure out how to put ‘fun’ back into the season?
Black Friday. A marketer’s goal is to create a retail event that ignites sufficient customer interest to turn thoughts to purchase actions.
Black Friday, the day after Thanksgiving, is a relatively new post poultry phenomenon. In the period from 1993 to 2001, Black Friday ranked from fifth to tenth on the list of busiest shopping days (the last Saturday before Christmas usually took first place).
In 2003, however, the holiday shopping season began to shift shape. From that year through 2013, Black Friday was actually the busiest shopping day of the year, with the exception of 2004 where it ranked second.
The National Retail Federation releases figures on the sales for each Thanksgiving weekend. The federation’s definition of “Black Friday weekend” includes Thursday, Friday, Saturday and projected spending for Sunday. The survey estimates number of shoppers, not number of people. As a reference baseline, in 2009 the U.S. had a population of 291 million. In 2013 the population grew to 305 million, an increase of 5%.
In the last 5 years, the population has increased 5% while Black Friday shoppers are up 27.6%; Average spend up 20.4% and Total Spent is up 49%.
All of the above looks pretty good ─ until you look at the trend lines.
Black Friday marketing strategies and rationales appear somewhat to be Media driven histrionics and hype. The modern day version of ‘crowd frenzy’, a phenomenon first referenced in Charles Mackay’s 1841 landmark work on social psychology and psychopathology, The Extraordinary Popular Delusions and the Madness of Crowds. To quote Mackay, “Men … think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” Remember, retailers are people too.
For the media, Black Friday is a ready-made story. It takes place at a time when there generally is little other news. There is no doubt that video or pictures of people stampeding through the doors of a Walmart is compelling. Then again, media depends upon retail advertising and thus have a vested interest in creating a sense of hype and anticipation around an orgy of holiday consumerism … to inflame the ‘madness of crowds’.
But what if Black Friday is not relevant to the outcome of the holiday selling season. What if it is not the bellwether or accurate barometer? What if it is not that relevant to the overall season? What if it is on the downward slope of diminishing returns? What if customers are losing interest?
Paul Dale of Capital Economics analyzed the relationship between retail sales during the week of Thanksgiving against the overall change in retail sales for November through January. To gauge how well Black Friday sales reflect all holiday sales, Mr. Dales, and his colleague Andrew Hunter, charted 20 years of year-over-year figures for Thanksgiving week against year-over-year sales for November through January. If Black Friday sales were a reliable forecaster of all holiday sales, the trends would match. But Black Friday sales bounced up and down like an erratic heartbeat. These are, perhaps, tantalizing insights.
The chart below shows the relationship is a very weak one. 20 years of data dots are all over the grid! But if there is any conclusion to be drawn at all, the relationship is actually negative! (That why the line is sloping downward.)
Consider these recent survey findings from a September 2014 ACCENT survey of 1,000 customers and 300 retailers:
Consumers see a sea of retail sameness. The retailing environment today is essentially oversaturated /overstored. We have entered an era of commodity pricing and product parity. Retailers are all chasing market share from their competitors, not their customers. The minute one retailer discovers that opening at midnight on Thanksgiving Day will attract a mob of people, cash and credit cards in hand, others are reluctant to cede those sales to their competition. It is an opening time and door buster deal arms race.
Marketers can try to tell people what ‘it’ is. Yet sooner or later people will figure out what ‘it’ really is. To repeat Mackay, “Men … think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”
What if ─ Black Friday is simply ─ hype driven? What if retailers are spending a lot of money and effort for an event, that in the end ─ tells nothing about retail sales for the full holiday season while at the same time ‘aggravates’ their customers? What if the event has turned ‘holiday fun’ into ‘shopper drudgery’?
What if the consumer relationship is not about one-day or four days, but is always ongoing. Is there a better way?
Incontrovertibly, the fundamentals are changing:
To survive in an increasingly competitive retail landscape, marketing initiatives must extend beyond an economic value proposition.
A relationship has to be based on understanding the individual consumer and delivering personalized value that is more than just ‘X’ percent off. The relationship must be a dialogue. As consumers adopt new technologies and shop across more channels, marketing technology and programs must be updated and adjusted to approach each customer like a puzzle. The objective is to create a seamless, vibrant, real-time accessible customer mosaic, not an electronic file of coded bits and bytes.
It’s not just about Black Friday anymore. Mass market events are giving way to a mass of niche markets, 365 ─ 24/7! Making the transition just takes imagination and the willingness to make ‘magic’!
Ron Lunde has extensive experience in the retail and wholesale food industry as well as a major advertising agency. He focused on marketing, advertising, promotion and customer satisfaction. Ron has also worked with a number of retailers, consumer packaged goods companies and CRM companies in the areas of strategic insights, sophisticated database technology and the tactical implementation of customer specific technology for marketing and sales programs and retail operations.
Lunde’s background includes senior management positions with Leo Burnett, Act Media, Price Chopper Supermarkets, Grand Union and Super Valu. Duties included managerial, supervisory and P&L responsibilities in retail, wholesale, advertising agency and start-up business assignments. He has successfully lead teams in a wide range of assignments over the years.
Ron has been a frequent industry speaker and university lecturer and has traveled extensively for the US State Department and Department of Agriculture to assist emerging Eastern European business and government agencies understand and thrive in economies that are now consumer demand driven.