Black Friday Blackout


Shoppers mass to enter Macy’s flagship at Herald Square for Black Friday.

Black Friday 2012 is now history. The end of the day is easier to identify than the beginning as early store openings have crept into the previously sacrosanct Thanksgiving Thursday. My wife and daughters jumped into the fray. I stayed home, writing lyrics and comforting our confused dogs who wondered why everyone wasn’t safe in bed at 3 A.M.

There is no question that Black Friday has become a social event, resembling the staying-out-all-hours ritual of prom night. From a marketing perspective, the more important question is whether Black Friday grows profits, market share and/or customer loyalty for participating retailers. Note two metrics absent from that inventory: gross revenue and unit sales. Inflating either of these figures through discounting is not necessarily a marketing or financial win.

Black Friday focuses on the Marketing “P” known as “price.” This is the element of the marketing mix that is the easiest to change, whereas new products, promotional campaigns or distribution programs (the “P” for “place”) require considerable effort and time to alter. This is not to say that “price” does not demand research and planning; however, it has always been used as the “rapid response” in marketing.

Black Friday’s “doorbusters,” ultra-low pricing on designated products, use a time-honored element from the “P” for “promotion” to execute the strategy: sales promotion, inducements designed to create immediate increase in demand. Black Friday is built around short-term discounts to spur traffic, in-store and online. Retailers have long used “loss-leader pricing” for such purposes, selling certain products below their regular price to attract shoppers and hopefully spur additional sales of profitable products. Other elements in the promotional mix are essential to Black Friday’s price strategy, including advertising to announce deals and store hours, and public relations to build expectations of a worthwhile experience and offset stories of store violence and any unpleasantness of Black Friday shopping. In 2011, I wrote an article on the negative PR ramifications of Black Friday mishaps.

Black Friday relies on the “P” for “place” as stores adapt their hours for the “convenience” of shopping on Thanksgiving evening and the very earliest moments of the Friday that immediately follows. Traditional brick-and-mortar retailers battling e-merchants use the “Black Friday experience” as a differentiator and an opportunity to match lower prices offered by Amazon and other online retailers. Nevertheless, online sales continue to grow during Black Friday and the days surrounding it.

Ultimately as a price strategy for retailers, Black Friday signifies competition-based pricing, specifically a form of customary pricing as it is now “expected” to offer extreme discounts on this unofficial holiday of consumerism. But is it good marketing? Overall sales and sales per shopper are up for Thanksgiving weekend 2012 versus the comparable period for 2011. Black Friday distending into Thursday and heavy discounting drove the numbers. Figures for the complete holiday season will be the most telling as retailers frequently require this period to reach profitability for the year. Profits and discounts are naturally antithetical, and Black Friday is built on the latter.

Return visits by shoppers for regularly priced items constitute retailers’ longer-term goal regarding Black Friday. Marketers seek evidence that the discount frenzy creates customer loyalty by introducing stores and reinforcing retail brands with shoppers. The Wall Street Journal reports the use of customer relationship management systems (CRM) to determine which products should be offered a steep discounts to incite Black Friday visits that can lead to additional sales that day or later in the season. The article gives an example of a shopper going to Sears only to buy “doorbuster” TVs without intending to buy anything else, defeating the purpose of such CRM-based planning.

As long as my daughters (and millions of other people) can shake off the typtophan OD and plunge into the nearest mall or big-box store at midnight, there will be Black Friday. For retailers, it has become the equivalent of the Cold War’s Mutual Assured Destruction (MAD) nuclear weapons policy. “We have to deepen our discounts and extend our hours, even if it may mean our obliteration. Because the other guy is doing it.”

About Jason William Karpf

Author, Professor, Nonprofit Pro, Four-Time Jeopardy Champ
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