Loyalty & Rewards

The Beginning Of The End Of Black Friday?

 

While most people mistakenly believe Black Friday is so-named because it’s the day merchants “go into the black” with sales for the year, longtime PYMNTS readers know better. Most healthy retail outfits are in the black before the holiday season starts, and the throngs of frantic shoppers descend upon them. The full historical origin of the day, however, is a bit complicated.

Suffice to say that what started out as a regional phenomenon in the 1970s went national by the end of the 80s — and fully crazy in the 90s and 2000s. Fistfights broke out, doors were literally busted open and the shopping day just kept starting earlier — at dawn, pre-dawn, at midnight, making it all the way into Thanksgiving night and seemingly on a path to supersede the turkey-centric holiday entirely.

But this year a funny thing has begun to happen.

Retail’s march into Thanksgiving’s territory has stopped advancing and actually started beating a hasty retreat when it comes to shopping in store. Marshalls, T.J.Maxx, Crate & Barrel, Pier 1 Imports, Barnes & Noble, Sam’s Club, BJ’s, Costco and many others have decided to go cold turkey (we couldn’t resist) on Thanksgiving Day retail, suggesting instead that a better idea is to have everyone just stay home with their families rather than shopping in their stores.

Walmart is still opening on Thanksgiving at 6 p.m., but it’s pulling back on the “doorbuster” and Black Friday mania in general. No gigantic stampede-worthy deals starting at dark o’clock. Instead, it is focusing on offering discounts — though none all that remarkable — throughout the holiday season.

REI is taking it one step further. It isn’t even opening on Black Friday and is instead officially encouraging everyone to eschew the mall and spend the day outside.

On one level, the good ethics around Black Friday are good business and, if done correctly, perhaps do a lot more to guide customer spend than throwing out discounts on a day where consumers are exposed to a glut of them.

And on another, it’s not as if these merchants are denying consumers something they really want. Only 45 percent of consumers recently surveyed report having any plans to shop on the traditional shopping holiday at all.

Which leaves Black Friday experiencing an interesting first: losing out to Cyber Monday in terms of participation and spend. According to the latest American Express Spending and Saving Tracker, analysts forecast a $3.2 billion spending extravaganza that day alone.

So, Is This The End Of Black Friday As We Know It?

That was MPD CEO Karen Webster’s question for BlueSnap CEO Ralph Dangelmaier as she probed just what was in store for the 2015 holiday shopping season.

In a word, yes, says Dangelmaier, the retail world is moving on and past the sort of frantic madness Black Friday typically tends to carry in its wake.

“I think this is the beginning of a trend to end Black Friday,” he told Webster, “because ultimately the experience is not good most of the time. Getting to stores is a hassle, the deals aren’t always that great or, when you get to a store, the item you want isn’t available. Then, there’s a real security problem; people have gotten hurt or even killed while shopping. I think the big changes we are seeing are a good thing.”

The big changes, of course, are the rapidly accelerating moves to digital and mobile and consumers who are increasingly content to skip the store and shop from the couch. And that, says Dangelmaier, can be a very good opportunity for retailers who are always open online. Those who want to get up at 3 a.m. and shop can do so online. Those who are bored by Aunt Mabel’s annual recounting of her holidays as a child after the turkey has been consumed can politely multitask and shop online, too.

Digital shopping is a 24/7/365 occasion that is always open for business.

Maybe, Dangelmaier says.

The Digital Explosion

While it always bears remembering that, overall, 90 percent of all retail traffic is predicted to take place in physical stores, a full 10 percent of it has moved to Web or mobile, and in certain categories, like books and electronics, the shift is even more palpable.

This Thanksgiving Day, retailers are projected to clock $1.6 billion in sales online, and on Black Friday, they are hoping to see a number that will climb to $2.7 billion — up from $2.4 billion in 2014. By Cyber Monday, online sales will top $3.2 billion — at least that’s the opinion of retail industry pundits. Total online sales for that five-day holiday period will top $7.6 billion.

“The new family trend will be to try to find the best online deal during cyber retail weekend,” Dangelmaier noted, “which they can do anytime and online, as opposed to dealing with crowds and discomfort while hunting for them in person.”

Because while the thrill of the hunt is exciting for some, others are just turned off by the experience. Apple Head of Retail Angela Ahrendts recently came out against offering Black Friday deals — something Apple has always done — mostly because she does not want to contribute to the masses. The in-store experience, she notes, should instead be both about calm and the ability to get the right help and attention from employees. Apple stores are also closed on Thanksgiving.

“If Apple is going to do that and REI is going to do that and Walmart is even shifting, that’s where you are going to see the trend get set,” Dangelmaier noted. “Closing on Thanksgiving and changing what Black Friday is all about is a very cool concept and one that we can just see consumers gravitating toward.”

Battling The Checkout Conversion Problem

So, consumers get to shop in their pajamas, retail workers get to spend time with their families and merchants get to make billions and billions of dollars. Everybody wins — let’s all go home, right?

Well, not so fast, notes Dangelmaier, because that $4.3 billion that’s up for grabs just on the two-day Thanksgiving/Black Friday shopping extravaganza isn’t being captured by all merchants. It’s instead filtering to those who have mastered beating what he calls the “checkout conversion problem.”

“One issue is going to lead to another. Closing on Thanksgiving and Black Friday means not having to worry about opening the store and staffing it, but that opportunity — and new problems — will all shift to online,” he told Webster.

And that is where some merchants can get into trouble.

Dangelmaier told Webster that online checkout proves time and again to be where the rubber hits the road and where customers often tend to give up and walk away.

“Not having a good experience checking out frustrates the shopper,” he said, noting that these problems are particularly acute on days like Black Friday and Cyber Monday when shoppers are out in force — and all at the same time — and systems tend to get overburdened.

“For instance, there are so many transactions going through, and if the merchant isn’t set up to handle it, problems start cropping up. Higher rates of card declines occur during the holiday shopping season than normally would as merchants ‘dial up’ their fraud detection efforts.”

But that’s just one of the issues merchants face.

Consumers who can’t check out easily — whether that means taking too many steps to check out, not offering the right payments methods or, during the holiday season, not having coupons or promo codes easily accessible and entered — often give up on the commerce experience entirely, and the merchant loses that sale, Dangelmaier said.

“This is the checkout conversion problem we see. And when we do see it, we see merchants missing big,” Dangelmaier noted. “Merchants can miss as much as 20 to 40 percent of their sales because they aren’t optimized to convert shoppers into happy buyers. ”

And, over the course of just those two days — Thanksgiving and Black Friday — that’s a pretty big deal. Twenty to 40 percent of the $4.3 billion in sales expected that day can mean between $1 billion to $2 billion in lost sales opportunities.

Something that, Dangelmaier noted, merchants may not even really know they are missing. “Most of the time, merchants don’t even have the data at their fingertips to know that they’re missing these sales,” he explained.

So, What Does That Portend For The Future Of Black Friday?

With nearly 50 percent of consumers this year saying they have no plans to trek to the mall on Black Friday, it seems that the shift is underway. Consumers seem willing to trade their trips out for digital shopping marathons, and the trade-off seems like an easy one for them to make. What remains to be seen is how prepared merchants are for that shift. We’ll know in just about two weeks.

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