Beyond Black Friday
Retailers dreaming of a more profitable Christmas
Retailers began promoting Christmas sales in October, decked the halls well before Thanksgiving and launched the most aggressive Black Friday and Cyber Monday strategies ever this holiday season. But industry analysts offer mixed views on whether the door-busting deals will deliver better retail profits under the tree when sales are tallied in the new year.
"We may have record sales, but at what cost?" asks Doug Fleener, president of retail consultant firm Dynamic Experiences Group in Lexington. The wisdom of Black Friday, Fleener says, is increasingly a subject of debate as tactics get more extreme each year. A recent poll by retailwire.com, a website targeting retail professionals, questioning the effectiveness of the Black Friday frenzy found more detractors than fans, Fleener among them.
Some respondents said the process seemed to be out of control. It made for disappointed customers and hostile shopping environments, not to mention tighter profit margins. But it did bring in shopping traffic and excitement, others offered.
Jon Hurst, president of the Retailers Association of Mass., says the take among his members is that Black Friday tactics work to bring in shoppers and he doesn’t expect them to go away any holiday season soon. In fact, he says, "I’ve got to think more companies will be looking to do it."
Whatever the merits of Black Friday and its stepchild, Cyber Monday, analysts and retailers we talked with saw some decided differences in this year’s kickoff to the holiday scramble.
Retailers offered record discounts this year, centering on consumer electronics, Fleener and others point out. And they promoted them earlier and more extensively. Britt Beemer of the Charleston, SC-based consumer research firm American Research Group, notes that computer bargains of years past gave way to high-definition TV deals as prices slipped below $1,000.
That, in turn, was credited by some with bringing more men out on the usually women-dominated day. But Beemer credited the violence over Play Station 3s prior to Thanksgiving with prompting more women to bring their men along.
There were more aggressive hours than ever, experts note, with some stores opening at 12:01 a.m. on Friday. Stores in some states even opened on Thanksgiving, which remains prohibited in Mass.
Susan Sampson, associate professor for the School of Management at Simmons College, says big-ticket items, like flat screen TVs, did draw shoppers, but more bought them for themselves than as gifts. Sampson says retailers were more organized and more adept at using multiple channels – print, television, the Internet – to get their message out.
While Fleener says the Black Friday tactics did draw traffic, he says sales turned soft in the days that followed. And while more shoppers came out early on Friday, Beemer says the after-work shopping crowd did not materialize this year.
Two area retail chains ratcheted up their BF efforts. John Giusti, vice president of marketing at Staples Inc.’s business delivery operations, says his Framingham-based chain store mounted a more integrated marketing effort to become a holiday shopping destination, linking its television ads with its website with its in-store kiosk for order placing. Staples opened at 6 a.m., as it has in years past, and led off with a global positioning system for $149 that sold out before most stores unlocked the doors. Staples also launched a website gift-advice service.
While Giusti agrees that door-buster deal competition can end up cutting into profits, he says Staples considers Black Friday a key part of its destination shopping campaign.
Natick-based BJ’s Wholesale Club Inc. also expanded its Black Friday promos, says spokesman Stephanie LaCroix, with specials including a 42-inch plasma TV for $945. Last year, she notes, was the first year BJ’s opened at 6 a.m. and this year was its first with e-commerce.
Fleener says it will be difficult to call how retailers have fared this Christmas season until mid January – or even beyond awaiting gift card redemption. "We’re not going to blow away those predictions of 4-5 percent [increases,]" he ventures.
While Cyber Monday did see increased Internet traffic, Fleener and Beemer view it as a marketing hype thus far. Hurst notes that his association members did expect a 20 percent increase in e-commerce sales but says it’s only around 10 percent of holiday sales.
So what can we expect on future Black Fridays? More discounts and longer shopping hours. Fleener thinks it’s only a matter of time before all retailers open on Thanksgiving. Hurst says, however, that none of his members have mentioned pushing for that in Mass.
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