Black Friday Continuing to Diminish in Importance
Another Black Friday weekend is in the books; initial data on foot traffic from Sensormatic Solutions indicates that store traffic was up 48% from 2020’s levels, but that it still trailed 2019 totals by about 28%. This is more likely due to consumers shopping earlier in the season than to the lingering impacts of the pandemic. For example, our own internal study of foot traffic at Macy’s stores in October found foot traffic was up 51.3% over 2020 levels—not a surprise. But, more importantly, they increased 7.2% over 2019 levels. We found the same basic pattern across both mall and outdoor shopping center tenants for October. Comparisons for November 2021 against both last year’s and 2019’s pre-pandemic numbers will be available shortly but are likely to show similar patterns, especially earlier in the month.
Remember, this is just foot traffic—actual retail sales totals will not be available for weeks. But we expect them to be strong, especially in the context of the entire month. All indicators are that Americans are in a better financial position this year than they were before the pandemic (though they are deeply concerned about inflation). But consumer polling has consistently shown that Americans are planning to spend more this year per person.
The reality is that Black Friday, while still the seminal shopping day in the United States, has been fading in its importance for years. According to PwC, 59% of American shoppers planned to shop on Black Friday as recently as 2015. By 2017, it had fallen to 35% and stayed there (last year it was 37%). The rise of online sales and earlier promotions were both factors here.
Nothing has diminished Black Friday’s importance more than the rise of eCommerce and the ability of consumers to shop 24/7. Adobe Digital Insights reported that Black Friday online sales fell 1.2% to $8.9 billion from last year’s $9.0 billion. This could be due to October’s surge of early shoppers. According to Adobe, $72.4 billion was spent online in October, an 8.0% increase over last year’s robust eCommerce sales. Cyber Monday figures will be available by next week’s edition. It will be interesting to see if a new record is set, or if the numbers are flat due to that same October surge.
But back to the issue of physical shopping on Black Friday…
We have a short memory as consumers, but Black Friday deep discounting was part of the appeal of the United States’ unofficial retail holiday at least since the early 1960s. But over the last two decades, the sales increasingly extended both earlier and later in the season. The net effect has been that Black Friday deals have become less of a motivating factor for consumers to fight the crowds. For years, race-to-the-bottom discounting hasn’t just eroded margins for retailers, but it’s become increasingly less effective in enticing shoppers. The constant dopamine hit of doorbusters eventually has a considerable downside.
The thing that is interesting about 2021 is that this is the year in which supply chain issues may replace discounting as the leading Black Friday disruptor. ICSC’s Annual Holiday Shopping Intentions Survey found that 75% of shoppers said they expected to shop earlier this year than normally would. Their reasons were to ensure product availability (48%), early deals (42%) and to ensure on-time delivery (42%).
Ironically, those very same supply chain issues will ensure that there will be fewer doorbusters and deep discounts this year. Whether they permanently alter the landscape is doubtful. But this year supply and demand issues will conspire to mitigate the cycle of discounting and potentially preserve retailer margins.
See you next week,
Garrick
