Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
  • How do you encourage speedier adoption of your product or service?
  • How do you increase the value your product or service creates for your customers?
  • How do you extract more of the value created by your product or service for yourself?

Read more...

Latest Comments

  • Anonymous said More
    Well written. Well constructed. Tuesday, 13 August 2019
  • Ron Giuntini said More
    As always a good read.
    I have always... Thursday, 25 January 2018

The Origin of Black Friday

What’s at Stake?

The Evolution of Patterns in Retail Sales

Some Issues Regarding the Black Friday Game

 

The Origin of Black Friday

The origin of the name Black Friday is described in “Black Friday (shopping) explained” as follows:

The day's name originated in Philadelphia, where it originally was used to describe the heavy and disruptive pedestrian and vehicle traffic which would occur on the day after Thanksgiving. Use of the term started before 1961 and began to see broader use outside Philadelphia around 1975. Later an alternative explanation began to be offered: that "Black Friday" indicates the point at which retailers begin to turn a profit, or are "in the black".

It has only been recently that Black Friday has been the busiest shopping day of the year. Previously, the busiest shopping day of the year had been the Saturday before Christmas. As Miranda Marquit describes it in “What Is Black Friday – History of the Holiday Shopping Phenomenon”

Interestingly, the day after Thanksgiving has only recently become the biggest shopping day of the year. Between 1993 and 2001, it ranked between fifth and tenth on the list of the busiest shopping days. In fact, for years, the busiest shopping day was usually the Saturday before Christmas.

But things changed in 2002. That was the year Black Friday took the lead, and it has remained the busiest shopping day of the year ever since, with the exception of 2004 when it was second.

 

There is general agreement that Black Friday has become popular for several reasons. Miranda Marquit provides the specifics succinctly,

Experts speculate that shopping on the day after Thanksgiving has become more popular because many people have the day off, stores offer extended hours, and almost every store seems to have a sale on the day after Thanksgiving.

More generally, “Black Friday (shopping) explained” indicates

Black Friday is popular as a shopping day for a combination of several reasons. As the first day after the last major holiday before Christmas it inaugurates the Christmas season. Additionally, many employers give their employees the day off as part of Thanksgiving leave, increasing the potential number of shoppers. In order to take advantage of this, virtually all retailers in the country, big and small, offer various sales. Recent years have seen retailers extend beyond normal hours in order to maintain an edge, or to simply keep up with competition... Historically, it was common for Black Friday sales to extend throughout the following weekend. However, this practice has largely disappeared in recent years, perhaps because of an effort by retailers to create a greater sense of urgency.

In that last sentence lies one of the key reasons for so much hype surrounding Black Friday: Retailers have created a sense of urgency in shoppers to spur purchases, using spectacular deals and limited supplies to get shoppers into stores, hoping they will stay there and buy other more profitable items. Again, from Miranda Marquit,

Black Friday is an ingrained part of our collective shopping culture, and as such, there is a great deal of hype surrounding limited quantity doorbusters, which can offer up to 80% off retail prices. Shoppers can only get these special deals at the very beginning of the sales, right when the doors open. Moreover, major retailers create a sense of urgency by offering special deals to draw the crowds into stores even after doorbusters have sold out.

Some of these additional methods that stores employ to create urgency include:

  • Advertising ridiculously low prices on certain items
  • Offering special sales for limited hours during the day
  • Limiting the number of items available for purchase at the special price
  • Offering additional loss leaders, merchandise priced lower than actual cost
Retailers design these methods to encourage consumers who hope to find once-in-a-lifetime deals to flock to the stores. The stores hope that shoppers will stick around and buy full-priced items in addition to pillaging their discounted merchandise.

Originally, there was an “unwritten rule” that retailers would refrain from advertising for the holiday season until the Thanksgiving Day parades had ended. From Miranda Marquit:

Many people believe that the parades featuring Santa Claus held on Thanksgiving first heralded the beginning of the holiday shopping season. Department stores like Macy’s in New York, the now-defunct Eaton’s in Toronto, and other department stores frequently sponsored the holiday parades throughout the 20th century. Sponsoring Christmas parades gave stores an opportunity to begin advertising holiday sales.

Over time, it became an unwritten rule that Christmas advertising didn’t start until after the parades. For decades, retailers adhered to the rule, waiting until the day after Thanksgiving to advertise holiday deals.

However increasing competition among retailers has pushed them to start advertising earlier and earlier. As Erika Adams indicates in “Are Black Friday Sales Worth the Hype? Experts Weigh In”

Shopular's head of marketing, Lee Senderov, attributes the mentality to a more aggressive sales approach from retailers. "Stores are leaking deals earlier than ever before," Senderov told Racked. "I've been in shopping now for over six or seven years and I never used to see deals for Black Friday being leaked before Halloween, and we're already getting Black Friday circulars from retailers."

And from Miranda Marquit:

Lastly, with the advent of the Internet, stores have begun to release their flyers online as a way to further create excitement and urgency well in advance of Black Friday. Fortunately, these pre-releases of doorbuster and sale information has also allowed enthusiastic consumers to determine the best deals and carefully plan shopping routes before the big day arrives.

Increasing competition has also led retailers to jump-start the beginning of the shopping season by opening their stores before Black Friday, on Thanksgiving Day. More from Erika Adams:

Opening on Thursday night is just another part of the game to get people shopping even sooner. The practice is a reaction to sales hype that saw competing stores pushing their opening hours way before midnight on Friday. "What happened before Thanksgiving is everyone was opening earlier and earlier on Black Friday," Jody Rohlena, the senior editor at ShopSmart, the shopping arm of Consumer Reports, told Racked. "So you get to a certain point and it's not Black Friday anymore—all of a sudden it's Thursday."

"Of course there's a ton of backlash," Rohlena acknowledged. "But like it or not, retailers are really looking for your holiday dollars and they're trying every trick in the book to get you to come in their store.

 

What’s at Stake?

Over the past decades, the holiday shopping season in general has led to so much hype and competition by retailers because a significant portion of their annual sales have been generated during this period. In particular, the measure of sales that is used to gauge holiday shopping is called GAFO:

GAFO represents sales at stores that sell merchandise normally sold in department stores. GAFO includes the following kinds of retail businesses:

  • General merchandise stores (NAICS 452).
  • Clothing and clothing accessories stores (NAICS 448).
  • Furniture and home furnishings stores (NAICS 442).
  • Electronics and appliance stores (NAICS 443).
  • Sporting goods, hobby, book, and music stores (NAICS 451).
  • Office supplies, stationery, and gift stores (NAICS 4532).

If sales were distributed uniformly across the months of the year, then each month would account 1/12 = 8.3% of annual sales. Between 1985 and 1992, GAFO sales for November and December combined averaged 24.5% of annual sales. In other words, the two months of the holiday season (16.6% of the year) brought in almost one quarter (24.5%) of retailers annual sales. Perhaps it’s not surprising, then, that retailers have been competing so intensely for holiday shoppers.

 

The Evolution of Patterns in Retail Sales

However, patterns in consumers’ shopping have been changing over time. Let’s take a closer look. Figure 1 presents all categories of retail sales, together with those categories included in the measure of GAFO sales. Notice also that sales by Nonstore Retailers, which includes mail order, vending machines, direct sales and ecommerce, have their own category, which means we can see how the relative magnitude of ecommerce has been changing over time.

Figure 1

1 NAICS

Figures 2A, 2B, and 2C present monthly retail sales for Total Retail Sales, GAFO Sales, and Nonstore Retailers for the years 1992, 2003, and 2014. As seen in the figures, over time all categories of retail sales, Total, GAFO, and Nonstore, have been becoming less seasonal, that is, more uniformly distributed across the year. What this means is retailers have been competing more fiercely during the holidays (more on Black Friday competition below) for a smaller portion of the annual pie.

(Any ideas on why retail sales have become less seasonal?)

Figure 2A

Figure 2B

Figure 2C

Not surprisingly, Figures 2A, 2B, and 2C also show that in-store sales (GAFO) have been losing ground during the holiday season, while online sales (Nonstore Retailers) have been gaining ground. This trend is more clearly presented in Figure 3. What’s easy to see in Figure 3 that is not so obvious in Figures 2 is that over time, GAFO sales have been decreasing as a share of total retail sales, while sales by Nonstore Retailers have been increasing as a portion of total retail sales.

Figure 3

As an aside, let’s see which categories have become larger portions of total retail sales and which have become smaller. This information is presented in Figure 4. We see that Nonstore Retailers and Gasoline Stations have been the big winners, while Food and Beverage Stores have been the big losers. Again, no surprises there.

Figure 4

Back on track, Figures 5A, 5B, and 5C present monthly retail sales by NAICS category. What these sales by category figures show is

  • The categories with sales that are the most seasonal (i.e., peak during November and December) are precisely those categories included in the GAFO measure, that is, the category of sales that proxies holiday sales.
  • These categories of sales that are the most seasonal have been becoming less seasonal over time. That is, the GAFO categories have been peaking less over time during the holidays and instead, they have been becoming more uniformly distributed over all months of the year.
  • The exception is the category of sales by Nonstore Retailers, which includes ecommerce. This one category of sales (not included in the GAFO measure), has maintained its level of seasonality over time. Combined November and December sales for Nonstore Retailers totaled 20.9% of annual sales in 1992, 20.3% of annual sales in 2003,and 21.2% of annual sales in 2014.

Figure 5A

Figure 5B

Figure 5C

Some Issues Regarding the Black Friday Game

What We Have So Far

Let’s summarize what we know so far.

  • The holiday shopping season has led to so much hype and competition by retailers because a significant portion of their annual sales – almost 25% – have been generated during this period.
  • Black Friday has become such a popular day for shopping because on that day, many people have the day off, stores offer extended hours, and stores offer great sales.
  • Retailers have created a sense of urgency in Black Friday shoppers to spur purchases, using spectacular deals and limited supplies to get shoppers into stores, hoping they will stay there and buy other more profitable items.
  • Competition has led Retailers to start the whole holiday season shopping ordeal earlier and earlier.
  • Advertising for Black Friday (and other holiday) sales has been pushed back from the Thanksgiving Parade during most of the 20th century to weeks before Thanksgiving during recent years.
  • The official start of holiday season shopping has been pushed back from the day after the Thanksgiving Parade during most of the 20th century to weeks before Thanksgiving during recent years. In fact, Black Friday has actually morphed into Black November. As ABC News reports in “Walmart Unveils Its Black Friday Strategy”

"This is no Black Friday. We are about to attend the funeral for Black Friday," Mark Ellwood, author of "Bargain Fever," told ABC News recently. "Now it is a 'Black Month of Discounts.'”

  • The busiest day of the shopping year has been pushed back from the Saturday before Christmas in previous years to Black Friday since 2002. 

The Internet’s Impact on Black Friday

The advent of the Internet has served to increase the level of competition between retailers, by facilitating communications – notably price comparisons across retailers – and by enabling online sales.

The Advent of Cyber Monday

In fact, a whole new parallel to Black Friday sales in bricks-and-mortar stores has cropped up for sales by online retailers, coined Cyber Monday. As shopping online has become an accepted alternative to in-store shopping, the Monday after Thanksgiving weekend has become another big shopping day, but for online sales.

As the story goes, when consumers are back at work on Monday and have access to fast computers, they are able to finish the shopping they weren’t able to complete on Black Friday and over the weekend by making purchases online.  As Esther Swilley, Ronald E. Goldsmith explain in “Black Friday and Cyber Monday: understanding consumer intentions on two major shopping days”,

In 2005, shop.org named the Monday after Thanksgiving Cyber Monday because many consumers who shopped during the prior weekend also did so online after going back to work on the following Monday. Cyber Monday is seen as a second day of major profits as sales surge on this day as well. Retailers use Black Friday promotions to lure shoppers to their stores, with extended shopping hours, hourly deals, and in-store promotions leading to increased Black Friday sales. Cyber Monday gives retailers the ability to extend those promotions, as well as offering a larger product selection for increased online sales. Cyber Monday is now the traditional beginning of the online holiday shopping season. It is believed that many people shop online during work hours on Cyber Monday and, as such, many retailers have begun to develop special sales and incentives for that particular shopping day.

Cyber Monday has become as important to retailers as Black Thursday. Information from comScore.com “Why is Cyber Monday Becoming More Important to Holiday Season E-Commerce?” indicates,

Interestingly, from 2005-2007 Cyber Monday wasn’t even close to the top of the ranking, going from the 8th heaviest spending day to 12th to 9th. But in 2008, Cyber Monday’s overall importance in the context of the holiday shopping season began to change as it surged up the ranking to #3. The following year it ranked as the second heaviest spending day, and finally culminated in 2010 assuming the top position for the year.

Presumably, as home computers have caught up to computers at work in terms of speed and efficiency, there has been no need for consumers to wait until Monday to do their online shopping. They can now shop from home on Black Friday. Ryan Green describes this development in “Black Friday is the New Cyber Monday”.

Cyber Monday has historically been the biggest online shopping day of the year. But watch out—Black Friday has the potential to outpace Cyber Monday as the top day for online sales. Maybe consumers need something to do to shake off their turkey overdoses. Perhaps they want to get their shopping done a few days earlier, and we know they are picking up online orders in stores earlier than they did in the past. Regardless, if this trend continues, Black Friday is likely to leap over Cyber Monday in 2015 as the biggest online shopping day of the year.

Black Friday is also expected to feature lower online prices than Cyber Monday, as retailers start to stretch their deals and promotions across November. Earlier shopping is also spurred by the likelihood that items will be in stock. These trends are removing the focus from one big day of shopping.

What’s clear is the importance of mobile sales on Black Friday—and mobile’s role in driving new sales on that day is likely to increase.

Last year, retailers began their Black Friday sales on Thursday, calling it Gray Thursday. As Erika Adams describes it in “Are Black Friday Sales Worth the Hype? Experts Weigh In,”

Opening on Thursday night is just another part of the game to get people shopping even sooner. The practice is a reaction to sales hype that saw competing stores pushing their opening hours way before midnight on Friday. "What happened before Thanksgiving is everyone was opening earlier and earlier on Black Friday," Jody Rohlena, the senior editor at ShopSmart, the shopping arm of Consumer Reports, told Racked. "So you get to a certain point and it's not Black Friday anymore—all of a sudden it's Thursday."

This year, retailers have made their Black Friday specials available online even before Thanksgiving. On Monday November 9, 2015, Matt Lindner in “Target gets a head start on Black Friday” reported

Target released its Black Friday ad and offered some of those prices to Target.com shoppers today.

Target Corp. … is offering web shoppers those discounts only through the end of the day, and only on Target.com. The retail chain sent subscribers to its email newsletter an email telling shoppers about the sales. The 27 Black Friday deals offered Monday include an assortment of Beats-brand headphones at 25% off and four James Bond movie titles in Blu-ray disc format for $6.

The one-day promotion is only one part of Target’s overall Black Friday promotional strategy, which it announced Monday in a blog post on Target.com. The company says it will begin offering all of its Black Friday deals online on Thanksgiving morning. Target will then open its stores at 6 p.m. on Thanksgiving

The Increasing Use of Multichannel Sales

As the use of the Internet to shop online and to gather product information and prices has proliferated, it has become important for retailers to make their shopping experiences multi-channel. Retailers who do not offer integrated shopping experiences to consumers will lose sales to retailers who do. Erika Adams provides more detail:

There's also been increased focus on reaching consumers equally on every front, from in-store to online to mobile. "Nowadays, a lot of the retailers are really trying to have this omnichannel presence where the same items are merchandised in every channel, whether it's catalogue, in store, or online," Senderov said. "I just met with a retailer and they said to me that one of their biggest priorities this holiday season was making sure that the customer can find the item wherever they choose to shop."

Esther Swilley, Ronald E. Goldsmith describe how different channels enable retailers to better reach consumers in any context.

What emerges from these findings is that consumers add new channels of distribution to their repertoire of buying modes and allocate spending across them depending on the task or the context of the buying decision.



Black Friday offers consumers an enjoyable shopping experience. Many families use this opportunity to shop together after the Thanksgiving holiday. Many malls bring in Santa Claus, offering photos with Santa and many activities for children. Retailers have used this day to open early in the morning for those shoppers who like to take advantage of hourly specials.

Cyber Monday offers a very different holiday shopping experience. Consumers are likely to use Cyber Monday to continue their weekend gift purchasing. Online shopping offers consumers the opportunity to purchase gifts they were unable to purchase at the mall, or gifts to be delivered directly to the recipients.

In “Black Friday Isn’t Dead, but Cyber Monday Could Steal its Thunder,”Angelica Valentine further explains the need for retailers to make the shopping experience as convenient and effortless as possible for consumers.

Consumers want their shopping experience to be as easy as possible and sitting at home on the couch is much better than putting on winter gear, jumping in the car, and waiting in line. While Black Friday still packs a punch for many retailers, making it the highest grossing day of the year for 41% of US retailers, Cyber Monday is gaining appeal.

it’s time for retailers to really make use of their online channels to get shoppers to check out this holiday season. Shoppers want convenience and multiple opportunities to save. That’s a bit counterintuitive because limited time offers are very effective in retail, but it’s a matter of presenting shoppers with more than one appealing offer to sway them. The retailers that provide great online experiences and promotions will be able to get the most out of the holiday frenzy.

Which Retailers Have the Most at Stake on Black Friday?

Given all the different categories of retailers (see Figure 1 above in the section “The Evolution of Patterns in Retail Sales”), which categories of retailers are most likely to be drawn into the frenzy of Black Friday? The answer can be determined by seeing which categories of retailers have the most at stake, that is, which categories of retailers would lose the most by not participating. The retailers with the most at stake are:

  • Retailers who generate significant sales during the holiday season, and
  • Retailers who compete on price.

In the section above, “The Evolution of Patterns in Retail Sales,” we saw that, generally speaking, retailers classified in the GAFO category generate the largest portion of their annual sales during the holiday period (see Figures 2A, 2B, and 2C). More specifically, we saw that retailers in the Sporting Goods, Hobby, Book, & Music Stores were the most seasonal in sales, with (i) Electronics and Appliances, (ii) Clothing and Clothing Accessories, (iii) General Merchandise Stores, and more recently (iv) Nonstore Retailers also having significant portions al their annual sales during the holidays.

Retailers who compete on price include those retailers that sell more homogeneous or otherwise easily accessible products, which pretty much include the categories that are also the most seasonal in their sales patterns.

It’s not surprising, then, that these are the very same categories of items that come to mind when I think of the blizzard of holiday advertisements I’ve received over the past few weeks.

Tibor Shanto validates these conclusions in “Making the Black Friday Experience a Success for Your Business”:

A key element of Black Friday is pricing strategy: Some retailers are geared to making up in volume what they sacrifice in revenue. Others will accept lower volume or units sold, but generate greater price and margin, driving better bottom line results.

Core to the above is how vendors choose to distinguish and/or differentiate themselves in the market in an effort to attract customers and revenue.

Customers whose view of value can be summed up by “wow, I can’t believe I can get this at this price,” will likely gravitate to those vendors willing to play the pricing game. It’s not viewed as much of an experience, and it yields little, if any, customer loyalty — everything is geared to one event, one shot, Black Friday: Throw everything at the buyer and see what sticks.

Others who seek a different and more complete experience, where the purchase itself is but one element of the whole, will focus less on price and a single event like Black Friday or Boxing Day, and more on the ongoing experience with the vendor, before and after the purchase.

Is There a Prisoner’s Dilemma?

Is there a Prisoner’s Dilemma in the Black Game? That is, could retailers all be better off if they could communicate with each other and commit to alternative actions? Yes, they could. Competition is forcing the retailers to start their holiday sales periods earlier and earlier; to hold store hours during Thanksgiving Day, through the night, and through Black Friday; and to offer steeper and steeper discounts on more and more items.

Retailers would all be better off if they could commit (i) to not start their sales before Black Friday, (ii) to not open before regular store hours on Black Friday, and (iii) to somehow limit the extent of discounts they offer. Under these circumstances retailers would all be better off by generating higher profits by discounting prices less and paying out less in employee wages (i.e., overtime).

Similar to the question of whether or not there is a Prisoner’s Dilemma is the question: Are retailers forced to compete on Black Friday (and Thanksgiving and Cyber Monday) by holding longer store hours and offering blockbuster deals? Many retailers have learned the hard way that if they choose to not compete, they will lose sales to competitors. On this issue Erika Adams notes,

In the business of Black Friday shopping, the promise of mindblowing deals you can't score at any other time of year is essential to get people out of bed and in the stores at all hours. A few years ago, the most diehard shoppers showed up in droves at midnight; now they're rushing out after Thanksgiving dinner. The hype is at such a level that almost all retailers feel like they have to play.



…[I]n reality, most retailers are just looking to join the fray with some sort of sale—and not necessarily the best one. ... I think it's become a standard business practice to offer promotions at that time of year, and I think consumers that are looking for apparel know that."

"It's becoming a vicious cycle," Hertzman explained. "You want to offer the better deal first, and you gotta keep offering better and better and better and better and it's a never-ending process. How low do you go? Eventually the retailers pay you."

In “Some Malls Pressure Retailers to Open on Thanksgiving,” Drew Fitzgerald observes that stores located in malls don’t have a choice; they are forced to stay open as long as the rest of the mall is open, or risk being fined by their landlords:

More small retailers will be open for business on Thanksgiving Day—and they may not have a choice in the matter.



Mall owners consider it “imperative for retailers and restaurants to be open” on Thanksgiving, said Anjee Solanki, national director of retail services for Colliers International Group Inc., a real-estate-services firm. “This is when they can capture as much foot [traffic] as possible and drive future business with specials for the following month. Every tenant must adhere to the hours for uniformity.”

Stores that break mall hours can be subject to steep fines and other consequences, retail and real-estate executives say.



The push for early Thanksgiving hours is simple: A half-closed mall won’t bring in as much foot traffic or business to the stores that remain open. “No one benefits by that, except for the employees,” the former Simon executive said.

Alternative Strategies for Retailers

Retailers can choose from many different strategies with which to compete with other retailers on Black Friday. Below I describe several options.

Opt Out of the Black Friday Game

Retailers can opt out of playing the Black Friday Game by not opening their stores that day. This year REI has been very vocal about adopting this strategy. Several other retailers have also opted for this strategy. What I find interesting is that the retailers who have chosen this option have made it clear to the public why they have done so. In particular, on its website, REI announced:

ON BLACK FRIDAY MORE THAN 1 MILLION OF US CHOSE TO #OPTOUTSIDE

We're so glad you joined us, along with many organizations, park systems, and outdoor companies. See who opted outside. #OptOutside is more than a day we're committed to helping people spend time outside with friends and family. It's been our way of life since 1938.

Aliah D. Wright describes this further in “In Focus: Blacking Out Black Friday?”:

REI isn’t the only retailer changing its habits on Black Friday. GameStop Corp. and Staples are planning to open later Nov. 27, as well. These stores face increased competition from online retailers, but are realizing additional savings by not having to pay employees overtime.



The Wall Street Journal reports that GameStop, which used to open most of its more than 4,000 videogame stores on midnight Friday, says that this year it is opening “several hours later and [will] give its employees the holiday off. Executives also say staying closed helps employee morale.”

Ben Davis provides more on the subject in “Which retailer has the best Black Friday strategy?”:

Jigsaw has published a 'Black Friday manifesto' on its website, which is a valiant attempt at a PR stunt.

The message, which you can read in full here, is all about how Jigsaw's clothes are too fantastic to discount.



So, in 2015, Jigsaw is confident it can sell its stock at full price until its end-of-season sale. Offering discounts earlier on Black Friday inflates demand ahead of this key period, potentially cannibalising sales.

Use the Holidays to Introduce New Products

Foot Locker has used the holidays as a jumping board to introduce new products at full retail prices. Ann Zimmerman, Dana Mattioli and Greg Bensinger provide more detail on this in “Will Retailers' Black Friday Strategies Work?”:

Foot Locker, which caters to die-hard aficionados known as "sneakerheads," likes to time its big shoe releases to Black Friday and regularly draws long lines of shoppers willing to pay $200 or $300 for new sneakers.

"People are willing to pay to get the right shoe," Chief Executive Ken Hicks said.

Move Beyond Competition on Price

Some retailers have chosen to transcend price competition, either by offering items that no one else has or by emphasizing everyday low prices. From Ann Zimmerman, Dana Mattioli and Greg Bensinger:

Target is aware that the best way to avoid matching prices is to offer stuff no one else has

And from Ben Davis:

ASDA has taken the opportunity to concentrate on a message of great prices across its core range (groceries rather than televisions), advertising £26m of discounts over the period.

Balance In-Store and On-line Shopping

The problem retailers will be facing with encouraging consumers to make purchases online is that they will lose out on having those consumers come in the store and perhaps make impulse purchases while they’re there. Retailers need to find a way to balance online sales promotions with in-store promotions so they don’t lose out entirely on impulse purchases. Ann Zimmerman, Dana Mattioli and Greg Bensinger explain how Wal-Mart is grappling with this problem:

Wal-Mart hopes to use the holidays to lure more people to Walmart.com, but it has to balance that goal with maintaining visits to its stores.

For the first time, Wal-Mart is offering its most coveted in-store Black Friday discounts to online shoppers at the same time—provided customers first sign up for special emails, download its mobile app or "like" the company on Facebook.

But Wal-Mart is also offering Black Friday deals at 8 p.m. on Thanksgiving Day, two hours earlier than last year, and plans to spread out specials throughout the weekend in hopes of keeping shoppers in stores, where they are more likely to make impulse purchases.

eCommerce

Amazon, of course, is the king of ecommerce. Ben Davis describes Amazon’s Black Friday strategy for this year.

Amazon's Black Friday strategy speaks for itself.

  • A week of deals, including 'deals of the day' and limited-time 'lightning deals' added as often as every five minutes.
  • The ability to watch a deal, and be notified when the deal starts.
  • Prime members are notified 30 minutes ahead of everyone else.
  • Some deals are available exclusively through the mobile app.
  • As usual, Prime allows for same day delivery.
  • Black Friday sponsored by Doddle, allowing click and collect.
  • Amazon is predicted to be employing 100,000 temporary staff to cope with demand across the season.
In 2014, Amazon increased Black Friday sales from 4m goods to 5.5m. Its first 'Prime Day' in July 2015 was even bigger than Black Friday 2014.

With such impressive strategy and logistics, Amazon continues to have a stranglehold on Black Friday.

In “Amazon’s Ingenious Scheme to Undermine Black Friday,”Davey Alba emphasizes how Amazon’s strategy keeps people tied to its site for the entire week:

“You can’t generate that same kind of excitement if you’re trying to do this in-store … Consumers aren’t going to be there every day for eight days. That’s not to say they can’t try to replicate customer success online, but Amazon is dominating online.”

Play Along

There are reluctant retailers out there who would rather not play the Black Friday Game, but who have learned (the hard way) that they can’t avoid it. From Ann Zimmerman, Dana Mattioli and Greg Bensinger:

Crocs found the Black Friday habit can be hard to kick.

Two years ago, the maker of indestructible plastic clogs and other shoes decided it was through with the margin-killing deep discounts.

When customers found out most products were still full price, they left. Traffic and sales dropped off a cliff, and the impact lingered.

Crocs got back in the game last year. This year, it is offering deals such as buy one, get one half off.

And from Ben Davis:

Indeed, in January of this year, managing director, Andy Street, appeared to pour tepid water on the holiday, with doubts over profitability and impact on operations, saying the following to the BBC:

"We've got to ask if it's right to concentrate trade so much in that one period.

"My personal hope is that this is the high water mark for Black Friday. I don't think we can put the genie back in the bottle but do we need to stoke that fire anymore? I personally hope not."

Balance Discounts with Repeat Visits

Finally, retailers must be careful when playing the Black Friday Game, by not playing all their cards in one fell swoop. Rather, retailers must balance their offerings of great deals on Black Friday with the need to bring customers back into the store during subsequent days of the holiday season. Ben Davis describes this strategy nicely:

A 45% increase in sales on Black Friday didn't do much for sales growth across the period, which stuck at 0.1% like-for-like in the 18 weeks to January 3rd.

So, Argos saw sales cannibalised by Black Friday in 2014, and this affected profitability.

To counter that this year, Argos has not only extended Black Friday to 12 days of sales (with its website crashing briefly on day one, November 20th), but has also ramped up to the event with its 'Red, White and Blue Friday' events.

These smaller events were designed to increase awareness of Argos from the beginning of November, hoping to encourage repeat custom from shoppers over a two-month period.

Combined with an aggressive media strategy, this is smart stuff from Argos and may well set a trend in the UK for more measured sales over a longer period. This will allow the retailer to better forecast and choose which products to discount.

More Blogs

Why Is Alcohol Accepted While Cannabis Is Not?

24-11-2019 - Hits:1318 - Ruth Fisher - avatar Ruth Fisher

Alcohol Use In America Cannabis Use In America Prevalence and Social Attitudes What Determines an Activity’s Prevalence? Social Attitudes and Laws Social Acceptance: Alcohol vs. Cannabis Social Narratives vs. Reality The Role of Common Knowledge   Both alcohol and cannabis have been around for thousands of years, and both have been used for recreational, spiritual, and medical purposes. Both...

Read more

Social Development Requires More Than Just New Technology

14-10-2019 - Hits:748 - Ruth Fisher - avatar Ruth Fisher

This post continues the discussion about what society needs in addition to technology to develop. In my previous entry, The Growth and Development Paradox, I established that Technology enables societies to develop. Foundational technologies have existed for thousands of years. Yet, sustainable development didn’t occur until the Industrial Revolution. Technological development is thus not...

Read more

Cannabis Science and Technology Finally Got Hitched!

03-10-2019 - Hits:654 - Ruth Fisher - avatar Ruth Fisher

The Separate Worlds of Science and Technology Throughout most of human history, science and technology existed within completely separate realms of society. Science, or natural philosophy, fell within the realm of the upper ranks of society. Natural philosophers were “uncommitted to any program of useful knowledge,” developing “abstract speculations about the...

Read more

The Growth and Development Paradox

24-09-2019 - Hits:737 - Ruth Fisher - avatar Ruth Fisher

Wheat yields in the UK hovered around ½ tonne per hectare for hundreds of years (see Figure 1). Imagine being able to generate no more wheat per unit of land than your ancestors who had lived 100 generations before you had been able to grow! The introduction of crop rotation...

Read more

The Four Social Forces That Shape Our Actions

23-09-2019 - Hits:688 - Ruth Fisher - avatar Ruth Fisher

Our desire to fulfill our wants and needs motivates us to act. A lot has been written about what, exactly, constitute our wants and needs as human beings. Examples include: Food, clothing and shelter Health, safety, and protection Self-preservation, sex, and procreation Social status, competition, acquisition, rivalry, power Love, belonging, connection Self-expression, creativity, contribution, independence I tend to...

Read more

What Promotes Social Well-Being?

22-09-2019 - Hits:579 - Ruth Fisher - avatar Ruth Fisher

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was...

Read more

Hurdles to Mainstream Adoption of Medical Cannabis

21-09-2019 - Hits:340 - Ruth Fisher - avatar Ruth Fisher

Based on the incentives facing different players in the US medical cannabis market, I believe the market will not achieve mainstream adoption unless or until the US overcomes several hurdles: (i) the classification of cannabis as a Schedule I drug, (ii) cannabis’s lack of FDA approval, (iii) the lack of...

Read more

Attracting Mainstream Consumers to Medical Cannabis

19-09-2019 - Hits:395 - Ruth Fisher - avatar Ruth Fisher

The US medical cannabis market is currently in its early stages of adoption: the market has gained some penetration, but not enough to warrant adoption by the early majority, that is, more mainstream users. My book, Winning the Hardware-Software Game, describes the technology adoption lifecycle in detail. A brief summary...

Read more