Will Black Friday Deliver The Sales?

And they’re off! But will those consumers in search of Black Friday deals deliver the sales to merchants this holiday season? Sarah Quinlan, SVP Market Insights at MasterCard Advisors, gave MPD CEO Karen Webster a brand new scoop on Black Friday predictions, consumer expectations and what today really means for merchants.

While some are convinced that Black Friday might go the way of the dodo bird in an era of online shoppers and mobile phones, Quinlan has no doubt that Black Friday is still a big deal — but with a twist.

Long gone, Quinlan says, are the days of Black Friday simply being a one-day frenzy in physical store locations across the country. With the onset of mobile and online shopping, many merchants are kicking off the traditional Black Friday sales and deals even earlier and with more force than in years prior.

Yet Quinlan expects that sales from this year’s shopping bonanza will jump at least 4 percent compared to 2014. And merchants will be working harder than ever to capture consumers’ hearts, minds and pocketbooks.

For one very simple and important reason: MasterCard’s research shows that the first two places a consumer shops at on Black Friday are where they will end up spending 75 percent of the money they plan to shop with. And, that, Quinlan says, puts pressure on merchants “to have that perfect offer on the day that will really get people in the store and spending.”

“There’s no doubt that what [merchants] are trying to do is find the hook to bring someone in. I think that is the critical thing because we know that consumers post-recession are significantly more loyal so they’ve got to have that consumer choose them,” Quinlan stated.

While retailers are notorious for bringing out the extreme discounts on Black Friday, Quinlan noted that deep discounts don’t actually drive big sales. The challenge is finding the balance between consumers’ expectations for deals and a business’ concerns about the financial and brand impacts of offering big discounts.

Even retail giant Walmart, the leader (and inventor) of doorbuster type deals, announced earlier this month it is ditching the well-known Black Friday staple this year to instead take a more holistic approach to holiday deal-making where the savings are spread throughout the season instead of piled up around certain pressure points.

Quinlan says that it’s evident that merchants are beginning to realize how critical their margins are, which has led many to turn away from the money-cutting discounts and instead offer the “product of the season” as part of their strategies for standing out amongst the competition.

However, consumers are also changing their strategies and instead are becoming experiential spenders who value the experiences their purchases can bring.

Quinlan said consumers are now spending more on restaurants, travel, lodging, airlines, etc., and the key way for merchants to cash in on the shift is to ensure they are tying an experience to the products and goods they are selling.

“The key is to figure out, ‘How does a merchant fit into a consumer’s lifestyle’ so that the consumer then purchases from that merchant first,” she noted.

Yet Black Friday has morphed into more than just a single day of over-the-top, in-store only promotions, as merchants are also making more strategic decisions about when and how long to keep their retail locations open on Thanksgiving and Black Friday. And that’s only if they decide to open at all.

“I think there’s been enough of a backlash against the early openings on Thanksgiving,” Quinlan explained.

“You will see some major retailers are choosing to open but wait until the evening of Thanksgiving, so they’re respecting that this is really a time for families to be thankful and to be together, and of course watch football and eat turkey. They are actually moving to really accommodate that celebration.”

As Black Friday continues to transform from just a day of shopping to an event that is synonymous with the entire holiday shopping season, the biggest concern for merchants is capitalizing on the loyalty of consumers to ensure the spending happens with them and no one else.

“Merchants are using methods, especially online, to curate what that offer will be to drive sales, whether it’s in-store or online,” Quinlan stated, pointing out that Black Friday is now more of a tool merchants use to signify to consumers “it’s the holiday season, start thinking about it, let’s go shopping and come with me.”