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Brick-and-Mortar Has Lost the Black Friday War

In the war for consumer dollars during the holiday season, Black Friday was a bulwark, making many brick-and-mortar stores’ entire year. A day for shopping in physical stores was the best weapon against the encroaching threat of e-commerce. The public backlash, a global pandemic, and omnichannel retail have aligned against physical retail’s biggest day, grinding it down from an in-store shopping mega-event into marketing hodgepodge. 

Since 2005 the day after Thanksgiving has been the biggest shopping day of the year. Known colloquially as Black Friday, the day is already here as retailers morph the meaning from a shopping day to a marketing term indicating the biggest deals of the season. But no longer do shoppers have to risk life and limb to score the best deals on a specific day, now they’re offered online for months. Walmart, Target, Amazon, and others have already begun offering Black Friday deals either in-store or online. This year’s Black Friday deals will run from early November until a week after Thanksgiving. Black Friday deals will be popular for years to come but the day’s significance for driving in-store foot traffic is already history. 

The truth is brick-and-mortar retailers were already losing the war before the pandemic. Experts were writing Black Friday was losing its meaning as early as 2015. “Yes, there will be deals and doorbusters Friday morning, but they are really becoming an antiquated concept,” Neil Stern, senior partner at Chicago-based McMillanDoolittle wrote in the Chicago Tribune six years ago. 

E-commerce already had Cyber Monday and Prime Day. Now it owns Black Friday too, merging everything into The Holiday Season. Holiday shopping is stronger than ever but Black Friday’s ability to drive in-store traffic is declining. This year, holiday retail sales are likely to increase between 7 and 9 percent, according to Deloitte’s annual holiday retail forecast. Deloitte also predicts e-commerce sales will grow by 11-15 percent year-over-year. Record-breaking holiday spending is being increasingly seized by e-commerce; this year more shoppers will make a purchase online than in-store. Experts say it’s hard to see that trend reversing or slowing.  

“While consumer concerns about health and safety have eased since the last holiday season, pandemic-influenced shopping behaviors continue to gain traction” Rod Sides, Deloitte vice chairman and U.S. retail and distribution sector leader said. “Retailers who remain resilient to shifting consumer behaviors and offer convenient options for online and in-store shopping, as well as order fulfillment, will be poised for growth this holiday season, and into the new year.”

Evidence shows in-store traffic has been declining for years. What was a slow slide became a sudden drop thanks to the coronavirus. Last year during the height of the pandemic, in-store traffic of Black Friday dropped by more than 52 percent. Occupancy limits, masking rules, social distancing practices, and other viral mitigation measures gave many shoppers pause. To do their part for public safety, many retailers offered fewer in-store deals, moving the biggest discounts online to give customers fewer reasons to risk their health in-store. Still eager to shop, more customers went online, spending $9 billion, up 21.6 percent from 2019 when they spent $7.4 billion, according to Adobe Analytics. Last year was a record-busting year for in-store retail and a record-breaking year online. More than 100 million consumers shopped online during Black Friday, up 9 percent, according to NRF data. On Black Friday specifically, 84.2 million shopped in stores, while more than 93 million shopped online. 

There’s another way to look at the data. More than 84 million shoppers made in-store purchases during the height of the pandemic. That type of questionable behavior has been baked into Black Friday from the very beginning, creating a social backlash that has many thinking it’s not a day worth saving. For years on every Black Friday, social media would fill with videos of shoppers trampling each other to grab doorbuster deals and getting in fist fights over toys. Black Friday Fights is a whole YouTube category. The website Black Friday Death Count keeps a running tally of death and serious injuries during the consumer bonanzas. Last year’s death toll? Two were shot and killed at a Northern California mall. Since 2006, Black Friday has been responsible for 14 deaths and 117 injuries. 

For a brief moment, Black Friday frenzy began taking over Thanksgiving itself as stores announced earlier and earlier opening hours, going so far as to open on Thanksgiving. Eventually, backlash reached outrage, and major retailers like Apple, Costco, IKEA, and others announced they’d be closing stores on Thanksgiving entirely. Some stores like REI have even gone so far as to close on Black Friday as a moral pushback against the rampant consumerism that produces crowds and chaos.

Black Friday brings out the worst in customers and the pandemic isn’t helping. Retail workers have noticed customer treatment of employees is getting even worse as months of starved social interaction erodes polite society. Violence, theft, and ornery customers are at an all-time high at brick-and-mortar retail locations. It’s no surprise the nation is facing a massive retail worker shortage, further hampering physical retailers’ ability to seize Black Friday opportunities. 

Retail workers have been quitting at rates well above the national average. Prior to the holidays, the U.S. was short 200,000 retail jobs. The seasonal surge of shoppers means the largest retailers will need to hire tens of thousands to keep up. Macy’s aimed to hire 76,000 workers, Kohl’s is looking to onboard 69,000, Nordstrom Rack is adding 28,600 jobs and Walmart hopes to bolster its workforce by 20,000. Not to be outdone, Amazon will hire more than 125,000 employees this season. The competitive retail labor market is driving wages higher than ever. Amazon is offering workers a starting salary of $18/hour with a $3,000 sign-on bonus. Across the board, employers who want to hire retail workers are raising wages. Rising labor costs are further complicating the calculus of Black Friday’s importance to physical retail. E-commerce is proving to be an easier way to seize holiday shopping opportunities than doorbusters and other in-store-only deals. 

Adtaxi’s 2021 Holiday Outlook survey found a third of respondents will spend 50-74 percent of their holiday dollars online rather than at a brick-and-mortar store. “More than ever before, the holiday shopping season is a multi-month affair, and businesses who restrict their efforts to Black Friday or Cyber Monday will miss out,” Chris Loretto, EVP of Adtaxi, said. “With online shopping as the new normal and Amazon dominating, smart brands will beef up their e-commerce capabilities.”

By now most major retailers have figured out omnichannel. Even small stores are leveraging e-commerce with Buy Online Pick Up In-Store (BOPUIS). The ubiquity of omnichannel and e-commerce throughout the retail sector is further muddying Black Friday’s significance as an in-store event. Considering all the traffic, parking issues, crowds, chaos, and employee abuse that goes into turning in-store Black Friday events into a financial success, moving the entire endeavor online is a sensible decision for most retailers. Black Friday still makes sense as a digital marketing event. Consumers associate the concept of Black Friday with the best deals of the year, it doesn’t have to be a specific day or at a specific physical location. 

Where Black Friday succeeds for in-store retailers is by boosting consumer spending per visit. Online shopping tends to be more specific so shoppers spend less per purchase. One study found 71 percent of shoppers spent more than $50 in a single physical-store visit, while only 54% spent over $50 online shopping per purchase. Brick-and-mortar’s strategy has been to offer doorbusters deals as loss leaders to get customers in the store, where they can browse and hopefully buy things with higher margins. Combined with careful inventory management that keeps heavily discounted products scarce, stores can build hype and lines of customers looking to seize the few deals first. It’s precisely this type of business model that produces some of the worst aspects of Black Friday as crowds rush and trample over each other. E-commerce is using new algorithms and store design to bring some of that magic online but has yet to perfect the model. Lighting deals with a time limit, virtual queues and other consumer signals like low stock warnings are attempting to infuse the sense of urgency that Black Friday gives in-store shoppers. 

Truly great deals that can drive in-store traffic will be harder to find than ever this year as supply chain issues roil retailers. Consumer prices are rising and retailers aren’t as willing to mark down prices when shipping and labors costs are spiking. This year Adobe estimates markdowns landing between 5 and 25 percent, down from the typical 10 to 30 percent. That’s only if the item is in stock. Both e-commerce and physical retail will be dealing with inventory issues for the foreseeable future. 

Waking up early to make it to the store on Black Friday was once a holiday tradition on par with carving the turkey. Black Friday helped drive some of the strongest retail sales years on record, but its importance has given way to e-commerce. A great omnichannel platform that offers deals year-round is doing more for a business’s bottom line than in-store Black Friday deals. Long criticized for its crass commercialization that leads to chaos, Black Friday may be a tradition best left in the past. Retailers are figuring out better ways to seize rising holiday spending. This year Black Friday will still be the largest in-store shopping day of the year, but the importance of that single day for brick-and-mortar locations is now simply a chapter of the holiday shopping season, not the whole ball game. Black Friday means as much, if not more, to e-commerce now as it does to physical stores. It’s better for everyone that way. 

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