Why REI and Modcloth will close on Black Friday, and prosper
Not all retailers are open on Black Friday, nor should they be. There are benefits to both, particularly when it comes to branding.
Holiday shoppers are gearing up for what is most likely their favorite, or least favorite, day of the year. With big crowds, crazy deals and lots of chaos, Black Friday weekend isn't for everyone — but it is for retailers.
There's hardly a more important time for retailers than Black Friday weekend (or the week or two surrounding it, which are becoming increasingly important) and yet the shopping day manages to conjure up a wave of different stances from retailers and consumers alike. Thanksgiving day is largely losing prominence as a shopping holiday, while Black Friday continues to split retailers into two diametrically opposed camps: those who stay open for the sales and those who make a statement with their closure.
A retailer's choice to embrace the flood or bar their windows and doors against it, is as much about sales as it is about marketing. In other words, there's not necessarily a right and a wrong — just a particular shade of grey for a particular type of retailer.
"[Not participating in Black Friday] hasn't proved to be great and it hasn't proved to be terrible," Marshal Cohen, chief industry analyst at the NPD Group, told Retail Dive. "You're not going to lose either way, whichever decision you make."
The case for opening
While questions abound as to whether Cyber Monday will eventually oust Black Friday once and for all as the busiest day, the traditional event isn't fading out anytime soon. A study by RetailMeNot found that consumers are planning on spending 47% more during the two shopping holidays, and dishing out a solid $743 during the week. Although Black Friday shoppers as a segment are on the decline, they still account for 16% of holiday spend, according to Cardlytics — and that shouldn't be ignored.
Especially not if you're a retailer with a model that can afford the doorbuster deals that customers have come to expect. According to Cohen, staying open for Black Friday, and possibly Thanksgiving, is more of a necessity for retailers in that competitive space and there's a whole different set of risks involved for someone like Macy's than for someone like REI.
"If you are in that competitive arena and you are a price-value doorbuster retailer, be it a mass or a department or a specialty retailer that's engaged in those categories, you need to be competitive," Cohen said. "You need to be in the game. You need to be competing with the online merchants that are doing it."
That could be why Macy's is once again opening its doors at 5 p.m. on Thanksgiving, a time where most are sitting down to a home-cooked meal of turkey, stuffing and cranberry sauce. Nevertheless, NPD Group's Checkout Tracking data shows that shopping on Thanksgiving is on the decline while Black Friday shopping is on the rise. In 2014, the most popular time for shopping during the two-day period was on Thanksgiving at 6 p.m., whereas in 2016 the most popular time was Black Friday at noon.
So even if stores choose to close on Thanksgiving, there's a good case to be made for staying open on Black Friday. And part of that comes down to what type of consumers are out shopping on the day. A study by Fluent, which was emailed to Retail Dive, found that Black Friday was still the most popular day for shopping, with 30% of holiday shoppers planning to do most of their holiday shopping on that day.
More importantly, however, Fluent found that millennials and Gen Z were the most likely to be out shopping on Black Friday with 62% of 18-34 year-old's planning to shop on Black Friday and 54% planning to boot up their laptops for Cyber Monday — consistent with a similar study by Natural Insight. The majority (61%) of that demographic also believe that Black Friday deals are worth dealing with the chaos and the crowds, making it worth a retailer's time to stay open if they cater to that age group.
"It's a couple clicks and you're there. I think there's a big risk for the online site of any retailer to not be available to their consumers when their consumers want to shop. Because if you're not available, they'll just go elsewhere."
CEO of ObjectWave Corp.
Since that age group is moving increasingly online, that means it's important for pure-play e-commerce sites and retailer websites to be ready for the rush — no matter when their consumers are shopping. Sam Cinquegrani, CEO of ObjectWave, a digital marketing and services company, warns that it's much easier for consumers to switch to a competitor when shopping online than in person.
"It's a couple clicks and you're there," Cinquegrani told Retail Dive. "I think there's a big risk for the online site of any retailer to not be available to their consumers when their consumers want to shop. Because if you're not available, they'll just go elsewhere."
Cinquegrani also points out that the costs of operation for an online retailer are minimal, saying that turning on another server to handle an extra hundred thousand transactions on Thanksgiving or Black Friday is, "very inexpensive. It's in dollars — in tens of dollars. It's not in thousands or tens of thousands of dollars."
The case for closing
Despite the sales potential of Black Friday, there are definitely reasons a retailer might want to throw in the towel on the holiday. Whether it doesn't fit with the brand or it's just not lucrative for the company, some retailers are better off shutting down operations instead of paying all the costs of operation just to get a marginal number of sales.
"You have to realize, 22% of consumers participate in Thanksgiving and Black Friday shopping, so where's the other 80%?" Cohen said. "The other 80%, if they're not doing it, why bother catering to the 20%?"
That point comes into even sharper relief when you consider how consumers feel about Thanksgiving and Black Friday openings. According to BestBlackFriday, only 17% of Americans want stores to be open on Thanksgiving, revealing a big bias against that particular day. While Black Friday is more popular across the board, recent studies have revealed that Cyber Monday is creeping up on it and more Black Friday shoppers than ever are heading online instead of into stores.
"It felt to us like Black Friday had come to symbolize the worst of that trend and it was an opportunity to take a stand against it."
Senior Vice President and Chief Creative Officer at REI
So why open a physical storefront when retailers could cater to the growing online segment of the popular shopping day instead? A study by Coinstar suggests that Black Friday could be the busiest online shopping day in U.S. history, giving retailers little reason to open up in person if they can push sales online instead.
Still others use closing on Black Friday as an opportunity to grow a strong brand message. REI, for example, is in the third year of its #OptOutside campaign, which this year expanded to include a social search engine, and the company shows no signs of opening on Thanksgiving or Black Friday ever again.
"We were seeing a trend of people moving toward 'I need stuff, I need stuff, I need stuff,' so we thought about how we could form a relationship with people who were looking for things other than just stuff," Ben Steele, senior vice president and chief creative officer at REI, told Retail Dive about the OptOutside movement. "It felt to us like Black Friday had come to symbolize the worst of that trend and it was an opportunity to take a stand against it."
Outdoors retailers in general have been bold with their Black Friday moves in the past, with Patagonia donating all of last year's Black Friday profits to environmentalist grassroots causes and even smaller retailers like United by Blue trying to encourage shoppers to make Black Friday something more than just a day of shopping.
The small outdoors company started a movement last year called "Blue Friday," which asks shoppers to head out to a nearby water source and do a cleanup instead of going to stores. All are strong messages to a community that cares about the outdoors and about the state of the world around them.
"I think that a lot of us in the outdoor industry, because we recreate outside, have a really strong connection to nature — and because this is a day when all eyes are on retail, it's a very unique opportunity to connect people with a movement that doesn't have to do with a sale," Kelly Offner, Cleanup Manager at United by Blue, told Retail Dive.
Outdoors retailers are by no means the only ones. Last year, e-commerce site Everlane set up a Black Friday fund to raise money for its 8,000 employees in Vietnam, which it then used to buy each employee a helmet, as the majority ride to work on a moped every day. And while Walmart will be open for both Thanksgiving and Black Friday, women's site Modcloth, which the company acquired in March and which caters to a younger, more upscale, audience, will be shutting down for Black Friday — a testament to what a difference a brand message can make. This year, BestBlackFriday has identified over 55 retailers closing for Thanksgiving, some of whom won't be open on Black Friday either, with retailers from Staples and Home Depot to Nordstrom and Costco making the list.
"Post Great Recession, there was this mass rush to stay relevant by simply going promotional and getting all the sales they could," Steven Barr, U.S. retail and consumer sector leader at PwC, told Retail Dive, "and now they're realizing that long-term it's not sustainable and it's something retailers are trying to avoid."
When choosing whether or not to open on Thanksgiving, Black Friday, or really any other big shopping day, retailers have more to consider than just, "how much traffic will we get (or not get) on Black Friday?" To start with, brands should consider what kind of message they're trying to convey to their customers. Both REI and United by Blue formed their movements out of holiday planning sessions, where talks about the brand's message surfaced despite the focus on sales.
"The first year, we were imagining: what is it to compete? What are the right promotions to run? And in some ways it felt like the wrong conversation."
Senior Vice President and Chief Creative Officer at REI
"The first year, we were imagining: what is it to compete? What are the right promotions to run? And in some ways it felt like the wrong conversation," Steele said. "I just remember when someone said, 'We could never do it, but what if we just weren't open on Black Friday?' It was really kind of a scary idea to say, on one of the biggest days of the year, we're going to close our doors."
While United by Blue will still be processing sales on Black Friday, the retailer's commitment to the environment has a serious impact on its brand message as well, and Offner said the company felt that message was "really absent from Black Friday," sparking the company to start the Blue Friday movement last year. The company has around 35 waterway cleanups planned for 2017, and hopes to accomplish 50 next year.
So let's say a retailer has assessed their brand's values and decided to stay open for Thanksgiving, Black Friday or both. There is still time to assess that strategy and tweak it for a bigger benefit.
On the digital side of things, retailers should be prepared for an influx of mobile orders over the holidays and should try to make the process as simple as possible for customers, according to Cinquegrani. They should also focus on re-targeting efforts, which could resonate more than other marketing techniques during the high-pressure days of the Black Friday week.
"If you're not going to be busy on Friday, or you're not going to be open on Friday, you better darn well make sure you hit on all cylinders on Saturday."
Chief Industry Analyst at the NPD Group
"Those kinds of immediate response technologies are more adept to time-constraint promos like a Black Friday," Cinquegrani said. "[They] probably should be used more, because the name of the game is to get the conversions within a time frame and those kinds of technologies lend themselves to that."
Even retailers that stay closed for the popular weekend have work to do. Cohen warned that retailers who are closed on Thanksgiving will be busy on Black Friday and likewise, retailers closed for both will be busy on Saturday or Sunday. With traffic carrying over to whatever days a shop is open, Cohen said it's important for retailers to be ready for that rush — and to prepare their customers for it as well.
"If you're not going to be busy on Friday, or you're not going to be open on Friday, you better darn well make sure you hit on all cylinders on Saturday," Cohen said. "And you need to make sure your customers and potential customers know your hours, know your plan and know your reason for not opening."
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