The CFI Group, a search firm headquartered in Ann Arbor, Michigan, just issued a controversial new study that indicates several factors have rendered Black Friday all but irrelevant.
The study, “Holiday Retail Spending Report 2013,” paints a dour picture of the challenges this year’s shopping season promises. At least in part, the less than stellar forecast is attributable to consumer wariness in response to an intractably uncertain economy. A mere 21 percent of consumers plan to spend more on gifts than they did last year. The bulk of would-be shoppers reported they intend on spending less, guided by a spirit of frugality rather than holiday cheer.
And no single variable will be as impactful on shopping decisions as discounts, as shoppers look to get more for less. Scouring shops for promotions is far important this year than store location, customer service or store atmosphere.
But the survey also indicates that retailers themselves have contributed to the diminishment of Black Friday by beginning their holiday marketing campaigns much earlier. Forty-nine percent of retailers report they will roll out their holiday promotions by October 31, according to a study conducted by Experian Marketing Services. By then, more 25 percent of shoppers have already kicked off their holiday buying and another 23 percent plan to do a majority of it prior to the end of October. Nearly 61 percent plan to be done by Thanksgiving. This means retailers can’t afford to procrastinate their major promotions until Black Friday.
The rise of e-commerce has changed the rules of the game as well. More than half of the much sought-after millennials plan to do 40 percent of their holiday shopping online. Millennials, however, will still spend a lot less overall. About half of all baby boomers will part with at least $500 this year, while less than a third of millennials plan on being so generous. The generational divide has significance with respect to timing as well. Approximately 36 percent of millennials are aiming to shop earlier this year, with 30 percent intending to be have finished shopping by the conclusion of December. On the other hand, only a quarter of baby boomers are as eager to begin earlier and a paltry 19 percent expect to be done before the arrival of December.
The trends look even worse for apparel retail than for other sectors. Consumers have noticed that currently low interests rates have been steadily rising over the last few months and, in anticipating of further increases, are focusing their attention on larger purchases that would require a loan. Erich Patten, a manager at Cutler Investment Group LLC, observed, “Consumers recognize that financed purchases will be more expensive with rising rates, and thus are prioritizing them in the current economy. Demand for soft goods will return as interest rates rise and purchasing patterns normalize.”
At least for the short term, and this includes the important holiday shopping season, consumers are expected to to spend more on housing, automobiles and major appliances. According to poll issued Ipsos Research, 26 percent of US shoppers plan to spend considerably less on clothing this holiday season that typical and a meager 12 percent intend to spend more.
And Black Friday increasingly appears to be a generational marker, appealing far more to baby boomers than up-and-coming millennials. Only 21 percent of millennials plan to shop at all between Black Friday and Cyber Monday. And even baby boomers are no longer as enthusiastic about a late season promotional marathon. About one quarter of the demographic plans to do the bulk of their shopping during that stretch, while another quarter plans to do none. Somewhat depressingly, the most reliable segment of the shopping population, at least as far as Black Friday is concerned, is the one comprised of those over 65 years of age.
If Black Friday is to survive as a major retail event, it will likely have to be moved up on the winter calendar and, to accommodate younger shoppers, re-conceived as an internet savvy promotion. But this year, retailers should approach the iconic day with modest expectations and the holiday shopping season as soon as possible.