Happy Thanksgiving, dear readers!
In the modern consumer mythology, Thanksgiving – a uniquely American celebration – is a day for Turkey and Football, usually starring the underwhelming Cowboys who coincide with the decline of the NFL. But, all traditions are fluid in America, as we always welcome and add new changes. Now, there is the dreaded Turkey Drop, where college freshers “drop” their high school sweethearts. There is the much-derided Tofurkey which has become a vegetarian thanksgiving tradition. Even the resistance is upended into tradition. Those naysayers who devotedly, every year, circulate Wednesday Addams videos, proclaiming their iconoclasm, only join and expand the tribes of people who celebrate Thanksgiving in their own way. Because Addams Family — a whimsical thanksgiving movie — turns 25 today!
One of the cultural traditions related to retail and shopping is the emphasis on Black Friday and Cyber Monday.
Retailers turn their Ink from Red to Black on “Black Friday”, which anticipate with bated breath. Here is a typical headline.
Black Friday 2018: Walmart and Target seize on first shopping season without Toys R Us
Irony is dead. It is such relentless focus on “sales days” like Black Friday that hurt Toys R Us. (Yes, Amazon hurt it too, but the path to ruin for Toys R Us was already set in place by private equity, as I wrote earlier).
It has only gotten worse in terms of focus. It used to be that retailers shut stores for Thanksgiving and opened for Black Friday, early in the AM. In the past few years, the opening times have crept earlier and earlier up the clock. Now, tragically, many firms are open during Thanksgiving. It is true that the online channel never sleeps.
I think providing opening stores to give deep discounts on Black Friday is a terrible idea for three reasons.
A. Poor Experience. You must have all heard the “moral” and sociological argument against opening on Thanksgiving and early Black Friday. Firms that open on Black Friday and Thanksgiving keep employees working on the day away from their families serving the most rambunctious shopping mob who are only interested in finding deals. As a person who researches and mulls over things I buy, and one who enjoys the process of searching for product fit based on attributes other than price, I find no aesthetic value in madness and pandemonium on Black Friday.
B. Focus on Wrong Customers. Recently, my Marketing colleague and coauthor Pete Fader has been making the very important argument that how Black Friday is not customer-centric. The sales that day bring out bargain hunters who look for sales, but those customers are not loyal to the brand or the firm in any way. Surely, price is ONE way to build loyalty but is not the ONLY way. Further, a discounted price is a pretty costly approach to build loyalty.
C. Poor Operations. Black Friday sales promote poor and inefficient operations. For many products, steady production and supply chain smoothing is the way to keep the operations humming, efficient, and resilient. Huge and unpredictable holiday spikes demand at low prices, hurt operations. You need extra temp labor; you need to ramp up production only for a month, and not use it again through the rest of the year. This problem is particularly exacerbated when customers are repeatedly trained to buy products every year at the lowest price, which leaves labor underutilized for the rest of the year.
Firm profits do not turn black on Black Friday. In fact, it is because of Black Friday that they remain red for a long time, instead of turning profits earlier in the year.
More and more firms are realizing this issue and changing their advertising modestly. Here is a small change from Bonobos.
REI, another customer-centric brand, has been going a few steps ahead with dropping these discounts. They close for Black Friday
We have reached this poor equilibrium of firms expending their strategy on its not-the-most-valuable customers and complicating their operations. All niche retailers need to rethink their strategy on Black Friday, which will improve their operations.
Happy Thanksgiving!
I hope you have a great time with family, friends, and people you love, doing things that you love to do.
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