Black Friday has traditionally marked the beginning of the holiday shopping season. No longer. Today it falls somewhere in the middle of an expanded holiday shopping period. Why? The two most prominent reasons are that some retailers begin their holiday sales earlier (sometimes before Halloween), and the rise of e-commerce (which allows consumers to shop for bargains year-round). This year, retailers are anxious because they have shelves stocked with goods but don’t know whether inflation-wary shoppers will dip into their pocketbooks to buy them. Business reporter Jordyn Holman (@JordynJournals) explains, “In 2020, it was pandemic closures and social distancing. Last year, it was the supply chain. Now, the problem is demand. For retailers, that may make this holiday season their biggest test yet.”[1] She continues:
“The holidays are the most important time of the year for retail. November and December can account for up to a quarter of the annual sales of department stores and specialty retailers. Companies place orders for seasonal and holiday merchandise months in advance so that they have enough stock on hand. The primacy of the holiday season has pretty much held steady, even during the turbulence of the pandemic. Whether through curbside pickup operations or a pivot to more expensive air deliveries during last season’s crunch, retailers still benefited from people ready to spend on all manner of products.”
Several years ago journalist Mark Matousek (@matousekmark) and graphic artist Samantha Lee (@justsamisfine) argued that the holiday season wasn’t as important as most people think. They explained, “[We’re told that] the fourth quarter is the most important time of the year for retailers. And as traditional, brick-and-mortar-based companies struggle to pay down debt and adapt to innovative competitors like Amazon, the holiday season is their only break from the damage they absorb during the spring and summer. … It turns out that the fourth quarter is not much busier than the rest of the year for the retail industry. In fact, by some measures, its importance has declined over the past 25 years.”[2]
Even Holman, who insists “the holidays are the most important time of the year for retail,” admits only a quarter of sales occur in November and December. According to Matousek and Lee, retail sales in the last quarter of the year haven’t surpassed 28% of retail sales since 1992. They conclude, “This means that, even as the internet and smartphones have revolutionized the way we shop, the seasonal timing of our purchases hasn’t changed much.” So why does Black Friday still have such cachet in the retail sector? Matousek and Lee assert, “Fourth-quarter retail myths persist because it’s the only time of the year when everyone’s gift-giving schedules align, so it feels like everyone is shopping more than they actually are.”
The Pandemic and Black Friday
Holman insists, “As Americans head into the season when they’re prodded to spend with abandon on holiday gifts, they aren’t showing the same willingness to do so.” There are many reasons for this change in traditional shopping habits. Business journalist Ben Unglesbee (@Ben_Unglesbee) explains, “Masks, distancing, curbside, October sales, out-of-stocks, inflation — the holidays have been evolving rapidly since the pandemic started.”[3] He adds, “The retail holiday season has gone through several convolutions over the course of the pandemic. COVID-19 has shaped the period in ways both expected and surprising, and in ways that have been different for each year.” He notes that in 2019, the last holiday season of the pre-COVID era, “[The retail sector] was marked by upticks in mobile and online shopping — which would accelerate wildly in the next year. Still, 84.2 million shoppers went to stores on Black Friday. … Foot traffic on Black Friday declined. Yet store pickup of online purchases was gaining steam.”
Unglesbee notes, “By Black Friday 2020, the world had endured more than six months of a once-in-a-century pandemic that had already killed more than 200,000 people in the U.S.” Perhaps the greatest impact of the pandemic on holiday shopping, according to Unglesbee, is that it accelerated holiday sales creep. He writes, “The early shopping led AlixPartners to declare the traditional holiday shopping period ‘meaningless’ in 2020. The holiday shopping creep earlier in fall may indeed be one of the lasting impacts of the pandemic on the season.” He added, “The traditional Black Friday shopping event, declining in importance for some time, collapsed in 2020.”
As we all know, last year’s holiday season was marked by supply chain snarls. People who had never paid attention to global supply chains soon learned how they could impact their daily lives. As a result, Unglesbee writes, “Empty shelves, rather than social distancing, weighed on consumers’ minds.” Nevertheless, he reports, “For all the talk of a supply chain meltdown, the season brought strong sales, and hefty profits for many despite spiraling freight and supply chain costs, thanks to higher prices and fewer discounts in an inventory-constrained environment.”
Most pundits agree that this year’s holiday shopping season will be impacted by inflationary concerns. Unglesbee asserts, “Consumers are laser-focused on price. According to an AlixPartners survey, 39% of consumers plan to buy at least half of their holiday purchases on sale and 40% said they plan to buy more affordable brands. … Along with more price-sensitive consumers, retailers might still have inventory that they are trying to unload as the holidays pick up, which could make for a sale-filled season.” The question remains: Will holiday sales be enough to get consumers to part with their money?
Getting Consumers to Spend
The folks at Google believe the right marketing approach can help loosen consumer pocketbooks. They note, “Every purchase starts with a moment of curiosity.”[4] They also believe that current consumer trends can be leveraged to spark that moment of curiosity. The first trend to exploit is the fact 26% of shoppers globally shop early for the holidays. Their curiosity can be sparked by providing them with gift ideas. The second trend noted by the Google team is the rise of the omnibuyer (or omniconsumer). Amanda Reekie (@moozir), founding director of Ovatoyou and imagineNATION Alliance, reports, “A quarter of physical sales are made through online discovery and research.”[5] She adds:
“We no longer live in a binary world of off and on; they have merged and each influence the other in myriad ways. If 25% of all physical sales made across core categories are made through online interactions, it is essential for physical retailers to link their digital to their in-store to capitalize on how the new consumer shops and meet them everywhere they are. Retailers need to break down legacy barriers and allow digital channels to support offline shopping and vice versa, allowing the best of both worlds.”
The Google team concludes, “Omnibuyers are paving the way for ‘intuitive shopping,’ where people browse and find inspiration concurrently, online and offline, across multiple product categories.” The final trend identified by the Google team is the fact that consumers are now insisting on both affordability and quality. In other words, they note, “Shoppers want the best of all worlds. … Searches containing ‘cheap and best’ have grown globally by over 40% [year over year].”
The bottom line, according to the Google team, is to take actions that showcase what makes your business, and the products you sell, unique. They write, “Promote your deals, shipping and return benefits, in-store inventory, and store pickup options in your messaging and on Search.” Vivek Pandya, a lead analyst at Adobe Digital Insights, told Holman, “[This holiday season, retailers] have to think about and pivot a little bit more to win the consumer compared to only thinking about the profit margin from the purchase. Now, with demand being weaker, they really have to go out of their way to advertise to consumers and get consumers with the highest likelihood to spend.”
Footnotes
[1] Jordyn Holman, “Retailers’ Holiday Wish: That Strapped Shoppers Will Spend,” The New York Times, 18 October 2022.
[2] Mark Matousek and Samantha Lee, “The end-of-the-year retail bump is a lie we’ve been told for decade,” Business Insider, 5 December 2017.
[3] Ben Unglesbee, “A trip through holidays past and future shows COVID-19’s lasting impact on the season,” Retail Dive, 10 October 2022.
[4] Staff, “The trends turning curious shoppers into customers this season,” Think with Google, September 2022.
[5] Amanda Reekie, “Why online is now an essential part of retailers’ offline strategies,” Business Live, 21 September 2022.
