Black Friday: The Relevance of Being Irrelevant
OOPS…Blah Black FridayUnfortunately for retailers, Black Friday was a non-event. In fact the whole Holiday weekend was pretty soft. Overall, according to a National Retail Federation study by Prosper Insights & Analytics, people who shopped at stores and online over the four day holiday weekend were down 5.2% from last year. Last year both traffic count and spending was down from the previous year. Total spending is expected to fall 11 percent to $50.9 billion.
Ho -Ho-Hum … a ruma-tum-tum … who took the fun?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?
The Season Shifted Shape… Or Did it?
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: The Relevance of Being IrrelevantBlack 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:
- 64% of customers say they don’t love shopping during the holidays.
- 65% of customers say that going to the mall during the holidays is their worst nightmare.
- 82% of customers don’t make a Black Friday plan.
- 70% of customers say Black Friday is meaningless because there will be sales throughout the holidays.
- 71% of customers say shopping online is fun.
What if Black Friday’s true relevance… is… that it IS irrelevant?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?
Experience tells me that consumers change faster than marketers or retailers doIncontrovertibly, the fundamentals are changing:
- What if consumers are looking for are selection, a friction-less experience, and price / value?
- What if the web and social media has rewired our U.S. consumers. Consumers, consequently, are less interested in browsing, more informed, more intentional, and smarter about prices?
- What if we are seeing is a slow and steady shift from brick and mortar retail to the web?
- Omnichannel shoppers, those who shop online, via mobile devices and in stores, will spend an average of $592 on gifts, which is 66 percent more than shoppers who only buy inside stores in the US, according to a recent report by Deloitte.
- With 1.28 billion monthly active users on Facebook and 255 million active monthly users on Twitter, the holiday consumer is increasingly dependent on social media for information and incentives that will prompt ecommerce sales or in-store purchasing decisions.
- 72% of U.S. adults are active on Facebook at least once per month, giving digital marketers an opportunity to influence and build a relationship with a majority of holiday shoppers on a single day in November and December, during a nestimated $650 billion holiday spending spree.
- Facebook and Twitter will both debut “Buy” buttons that allow in-feed sales within the world’s two most prominent social networks. These new commerce tools will address retailers’ growing focus on driving sales and marketing research through social media while adding an MROI metric.
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.