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5 Reasons Black Friday is Dying

Posted By Administration, Thursday, November 17, 2016
Updated: Wednesday, November 16, 2016


by Bryan Nella, GT Nexus


Black Friday and Cyber Monday were once vital days in the retail calendar. They were linchpins to profitability for the year and set the tone for the important holiday season. However, according to analytics firm RetailNext, Black Friday sales declined 1.6% last year compared to 2014. They also declined 14.1% in 2014 compared to 2013. Store traffic has suffered as well, falling 1.8% in 2015 and 16% in 2014.1

Is Black Friday a thing of the past? If so, what has led to its demise? Here are five contributing factors to the woes of Black Friday:

  1. Retail is being redefined. Commerce is now 24/7/365. It doesn't matter where, when or how you shop. Black Friday is traditionally viewed as a day that revolves around the customer – deals and promotions. Now, that's every day. Retailers and their entire communities of suppliers and trading partners have to be consumer-centric.
  2. The role of the brick-and-mortar store is evolving. More retailers are embedding unique experiences into the physical store to lure customers. This is a shift from the days of customers lining up to surge into retail stores to capture deals. Removing that deal-seeking urgency leaves little allure for traditional Black Friday as we know it.
  3. The holidays are being "taken back." Retailers are moving away from Thanksgiving sales. More malls are closing altogether for the holiday. A recent trend in prior years was to start Black Friday sales a day early – on Thanksgiving. This has quickly reversed due to employee pushback and lack of business impact from the extra day. The results simply haven't been there.
  4. Consumers are finding deals and shopping elsewhere. PWC released data showing close to two-thirds of consumers start shopping before Black Friday. 29% have completed their shopping by then.2
  5. Amazon is drawing much of the sales growth. Consumer purchasing insights provider InfoScout predicts that holiday 2016 sales growth will be won by Amazon. "For all other retailers, the shopping season will be a zero-sum game." Amazon, by the way, started its Black Friday promotions on November 1. They will run through December 22.3

Unfortunately, most retailers continue to play the same old Black Friday song each year. The Wall Street Journal recently reported that "eighty percent of the products and 43% of the prices promoted on the front pages of the 2015 and 2014 Black Friday circulars of Best Buy, Macy's, Target, Wal-Mart, Kohl's and J.C. Penney were identical, according to price-tracking firm Market Track LLC." The article goes on to point out that many retail executives seek to primarily mitigate risk on Black Friday at a time when "defending their turf against online rivals is paramount."4

Fading into the Black
The notions of Black Friday and Cyber Monday are becoming less important in the retail industry. We are in a world of constant commerce. Consumers are accustomed to deals every day. They know where to look for and research goods and prices. Much of this takes place with Amazon or price comparing online. So does this mean the retail store will continue to play a dwindling role in Black Friday? Not necessarily. There is still room for the retail store, specifically store promotions that tie into a unique experience. Promotions are no longer around price breaks. Store promotions will have to feature reasons to visit a physical store to see, feel and experience a product or service. And retailers will have to innovate to create new touchpoints that didn't exist. A great example is the move by West Elm to create an innovative new showrooming experience by opening a hotel for customers to try out their furniture.4 Breakthroughs like these are a must for retailers. This applies to not only Black Friday, but to the other 364 days of the year.

[1] http://www.usatoday.com/story/money/2016/10/27/black-friday-dead/92523796/
[2] http://www.pwc.com/us/en/retail-consumer/retail-and-consumer-2016-holiday-outlook/key-findings.html
[3] http://www.usatoday.com/story/tech/2016/11/01/amazons-black-friday-deals-start-today/93098696/
[4] http://www.wsj.com/articles/black-fridays-inside-secret-same-deals-every-year-1478008801
[5] http://www.gtnexus.com/resources/blog-posts/west-elm-retail-transformation


Bryan Nella is Senior Director of Corporate Communications at GT Nexus, the world's largest cloud-based supply chain network. He has more than 12 years of experience distilling complex solutions into simplified concepts within the enterprise software and extra-enterprise software space. Prior to joining GT Nexus, Bryan held numerous positions in the technology practice at global public relations agency Burson-Marsteller, where he delivered media relations and communications services to clients such as SAP. In previous roles he has worked with clients such as IBM, MasterCard and U.S. Trust. Bryan holds a BA in Mass Communications from Iona College and a MS in Management Communications from Manhattanville College.

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Tags:  Black Friday 

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Did You Get the Black Friday and Cyber Monday Message from Consumers?

Posted By Administration, Thursday, December 10, 2015
Updated: Wednesday, December 9, 2015

by RVCF


Another Black Friday and Cyber Monday have come and gone, and both the sales figures and consumer behavior data should serve as a wake-up call for the retail industry. Let's dive into some of the numbers.

Online spending on Cyber Monday 2015 couldn't maintain the torrid pace established over the weekend when sales increased 26 percent on Saturday and Sunday compared to 2014. But Cyber Monday sales were still up 18 percent, according to IBM. Data from Adobe Systems Inc. shows that total Cyber Monday sales exceeded $3 billion, with nearly $800 million coming from mobile devices.

A National Retail Federation survey found that more than 103 million people shopped online over the course of the weekend. Fewer than 102 million shopped in brick-and-mortar stores. A report from ShopperTrak shows that in-store sales dropped 10.4 percent.

Of course, not all retailers were prepared for such an enormous spike in online traffic, which doubled previous traffic records in some cases. The websites of a number of major retailers went down briefly and many customers were forced to deal with an abnormally slow checkout process. According to Adobe, out-of-stocks doubled their normal rate, with 13 of 100 product views showing an "out-of-stock" notification.

15 percent of online purchases were made using smartphones, and 12.4 percent were made on tablets, according to the NRF. IBM found that purchases made on smartphones increased 75 percent and surpassed online spending on tablets for the first time.

Nearly eight in 10 shoppers use their mobile devices when shopping brick-and-mortar retail stores, according to survey from Deloitte and Statista. 55 percent compare prices and 45 percent research products and find coupons.

A survey from the International Council of Shopping Centers tells us that shoppers are doing their research before they go to the mall so they can get in and out as quickly as possible. On Black Friday, shoppers visited an average of 3.3 stores and made a purchase at an average of 2.8 stores. Consumers know what they want before they get to the store.

However, a very small percentage of sales is coming from social media. Facebook, Instagram, Pinterest, Twitter and other social platforms drove only 1.7 percent of Black Friday sales. On the other hand, traditional e-mail promotions continue to deliver ROI and drove 25 percent of online orders on Black Friday.

There are few important takeaways from this data. We've reached a tipping point with online vs. in-store shopping. Most experts predicted a rise in online and mobile sales, but nobody predicted such a dramatic increase. Retail industry stakeholders need to pay attention to the messages sent by consumers over the holiday weekend.

First, the majority of consumers now prefer to shop online. Second, when they do go to the store, they want to spend less time there. Third, consumers are no longer just comparing prices with their mobile devices. They're buying with their mobile devices.

These trends shouldn't shock anyone. The folks who have been taking their time in developing and improving their omni-channel strategy and beefing up their online and mobile offerings are at serious risk of being left behind. The folks who continue to cling to an unsustainable model for the physical retail store risk becoming obsolete.

Retailers, suppliers and service providers need to collaborate and figure out how to capitalize on online and mobile shopping and adapt the brick-and-mortar shopping model. That's where RVCF comes into the picture. We want to bring industry stakeholders together to answer some key questions.

How do we solve the out-of-stock problem on the busiest shopping days of the year?

How do we solve the issues that contribute to a negative online shopping experience during this time?

What strategies for improving online and mobile sales need to be cultivated? Why isn't social media driving more sales?

How can the in-store shopping model be changed? Should retailers that don't compete with each other join forces? Should the mall become a giant open space with different kiosks for different brands and stores? What is the best way to reduce store footprints and make better use of in-store real estate?

We need to hear from you. What did you do well during the holiday weekend and what weaknesses were exposed? What are your ideas for building on strengths and correcting weaknesses? What more do you need from trading partners and service providers? Visit the RVCF forum boards and share your thoughts, ideas and concerns about taking advantage of online and mobile shopping and improving the in-store model.


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Tags:  Black Friday  Cyber Monday  e-commerce  Holiday 2015  Omni-Channel 

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"Bleak" Friday 2015: A Perilous Season Ahead for Retailers?

Posted By Administration, Thursday, December 10, 2015
Updated: Wednesday, December 9, 2015

by Dwight D. Hill, McMillan Doolittle LLP


On a rainy, cold Black Friday two weeks ago I went to one of the local malls to check out the crowds. I was shocked – I drove right up to one of the department stores, walked in and saw neat displays with very few crowds. I had to check my watch to make sure I had the date correct! The crowds came later, but brick-and-mortar traffic was definitely down for Black Friday 2015. According to Shoppertrak, in store sales were down 10.4% versus 2014.1 So what is happening? Will it be a "blue" Christmas for retailers? Here's some perspective on the retail trends we're witnessing:

1. Promotion creep. Black Friday promotions have crept over the years earlier and earlier in the month of November, with many beginning this year on November 1st. The result is an incredible dilution of the Thanksgiving shopping weekend. Combined with Thanksgiving Day openings, the pie is simply divided over a greater amount of time. The result: The sales over the holiday weekend appear softer.

2. The shift online continues. Why wait in line or get out the door at 4:00 am when you can shop online? This year, the trend hit a record – Thanksgiving Day through Cyber Monday netted a record $11 billion in sales, a 15% increase over 2014 according to Adobe.2 Cyber Monday also turned out to be one for the record books – it was the largest online sales day in history, hitting $3 billion in sales.3 These online sales certainly influence brick-and-mortar sales, but when it comes to Black Friday crowds, it looks like a lot of folks chose to avoid the madness and shop online instead. The result: Retailers' e-commerce businesses will set sales records, with margins pressured by all of that free shipping.

3. Third quarter sales were soft. We saw a who's who list of retailers including Macy's, Best Buy, and Nordstrom report disappointing quarterly results recently. What this means is inventories are likely higher than planned, which means a raucous promotional holiday season ahead, particularly later in the month if sales don't materialize as planned. The result: Yet more margin pressure to clear through holiday inventories.

So will we hit all of those holiday sales predictions? We will see, but one perilous fact is certain – retailers' margins this year will certainly be in a race to the bottom.

[1] http://www.shoppertrak.com/media/press-release/in-store-retail-sales-decline-on-black-friday-weekend/
[2] http://www.adobe.com/news-room/pressreleases/201511/113015AdobeDataCyberMondaySales.html
[3] http://www.usnews.com/news/business/articles/2015/12/02/record-cyber-monday-spending-tops-3-billion


Dwight D. Hill, whose background includes leadership roles with Neiman Marcus and Deloitte LLP, is Partner, McMillan Doolittle LLP. Dwight can be reached at dhill@mdretail.com. Learn more about our services and perspectives on retail by visiting us at www.McMillanDoolittle.com.

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Tags:  Black Friday  Brick-and-Mortar  Cyber Monday  Holiday 2015  Omni-Channel 

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