By Dr. Mark Gambill
Faculty Member, School of Business, American Public University
In the retail world, the day after Thanksgiving, known as Black Friday, is the beginning of the holiday shopping season. For most retailers, however, the drive toward year-end sales begins right after Labor Day and certainly commences in earnest in October.
According to the National Retail Federation, retailers on average generate 19% of their annual sales in November and December and for some, that number could be higher. I like to call the holiday retail sales period the “Silly Season,” because most retailers have a hyper-focus on sales during this time and things get a little crazy.
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The Origin of ‘Black Friday’
According to the History Channel, the term “Black Friday” was first used to describe an 1869 financial crisis, when corruption and stock fraud caused the U.S. gold market to collapse entirely. That day — widely blamed on the faulty investments of two infamous Wall Street financiers, Jay Gould and Jim Fisk — saw the market plummet 21%. There are some other theories, but this one has the most credence. Suffice to say that there is an ironic twist to using the term Black Friday with a genesis in a market crash for one of the hottest shopping days of the year.
As an adjunct faculty member at APU, I teach several classes in management, retailing, real estate and other courses. But my so-called day job is Vice President of Real Estate Operations for Belk Department Stores, which is a traditional, full-line department store chain with 291 stores in 16 states.
I have also worked for several retail landlords and also with Macy’s. Every year, there were always questions about Thanksgiving and Black Friday and I found myself dealing with these issues every year.
These issues have become an even more critical situation in the age of COVID-19. There are three issues in particular related to retail operations during the 2020 holidays. For example, how do retailers:
- Plan to advertise their sales?
- Control crowds?
- Move beyond traditional Black Friday shopping?
Black Friday Advertising
In a normal Black Friday year, all holiday shopping promotional efforts are focused strictly on driving traffic into the stores on Thanksgiving Day and the day after. In years past, the question was simple: How early do we open on Thanksgiving?
Despite the pushback in some quarters about cutting into traditional family time, many retail venues would open at 5 a.m. on Thanksgiving Day and remain open throughout the weekend, including 24/7 on Black Friday. Almost every retail establishment was open for holiday shopping for some period of time on Thanksgiving Day as a kickoff to Black Friday.
This year, many stores and malls are simply choosing to not open at all on Thanksgiving. According to Black Friday.com, over 40 national retailers and Simon Property Group, the nation’s largest shopping mall owner, have confirmed that they will not be open on Thanksgiving Day.
So how are retail marketing efforts changing for Black Friday in the age of COVID-19? The primary way this is occurring is by starting Black Friday well before the actual Black Friday.
The focus is shifting from loading sales and other deals on Black Friday to weeks before the Friday after Thanksgiving. In its five-color newspaper inserts for November 8, Target advertised “Black Friday Deals Now.” Home Depot’s insert pushed “Black Friday Improved. Prices start now through December. In every aisle.”
Similarly, Best Buy ads offer the same prices online as in its stores with free delivery. Most retailers are utilizing similar concepts.
Walmart kicked off its online holiday deals on November 4, with new deals in stores on November 7. The second sales event began online on Veterans Day, November 11, followed by a similar in-store event on November 14. The world’s largest retailer will wrap up its discounts online on November 25 with new discounts in stores on November 27, the traditional Black Friday.
Crowd Control and Holiday Shopping Safety Measures
Of course, many of the changes in store operating protocols are being driven by COVID-19. At Belk’s this year, we went back and forth on this issue of store control of crowds.
At first, we were going to be open our regular hours on Thanksgiving Day. Then we decided to close for the holiday. Our current posture is that we will open at 4 p.m. on Thanksgiving Day and remain open until 11 p.m. and reopen on Black Friday at 7 a.m.
The emphasis, however, will be on certain functions such as Buy Online, Pick up In Stores (BOPIS) and curbside pickup, rather than general store operating hours.
On Thanksgiving Day, only 12 Belk stores in the malls will be open. Another 24 stores have a one-way aisle requirement, and all employees must wear masks. Another 210 stores have mandatory mask requirements for customers where they are jurisdictionally required.
In addition to mask wearing, social distancing and hand sanitizer stations, Belk screens all employees for COVID-19 including completing a questionnaire prior to starting shifts and taking employee temperatures. Customers are encouraged to avoid crowded places and assembling in groups other than family units.
Just like almost all other retail venues, Belk posts health and safety policies in conspicuous locations. Some 153 stores of our stores (about half the total) will operate at normal fire capacity and the remaining stores will be at 50% or 75% normal capacity.
Six-foot distances in lines at cash registers and other high traffic areas will be maintained. Routine and frequent environmental cleaning and disinfection of high touch areas within EPA approved disinfectant to eliminate SARS COVID-19.
Rather than the usual method of a sales associate applying cosmetics to a customer, touch-free cosmetic marketing teaches customers how to apply makeup. Also, individual tester packets are used instead of using larger samples for several customers.
When I was a child, it was a big deal to go downtown to the only department store in Cincinnati, Shillito’s (now Macy’s), to see Santa Claus. We would stand in line, sometimes for hours, to tell him what we wanted for Christmas. In the age of COVID-19, seeing Santa is being advertised as by appointment only.
Moving Away from Traditional Black Friday Holiday Shopping
One big change in traditional Black Friday shopping in the age of COVID-19 is an even bigger move toward internet shopping and onsite fulfillment. As we know, online shopping is increasing every year and COVID-19 will accelerate that trend. Customers are going to be encouraged to buy online and pickup in stores. A study found that 67% of retail customers nationally made a BOPIS purchase in the last six months.
For example, in August, BOPIS orders at Belk accounted for 10% of sales. In September, that number grew to 14% and in October it was up to 19%. Between now and the end of the holiday shopping season, Belk fully expects greater than 20% of all sales to be online.
Belk customers are incentivized to participate more heavily in BOPIS with the Very Merry Surprise Gift Card™ promotion where one lucky customer receives a gift card each day at each store equal to the amount of their purchase. Other retailers have similar promotions.
In order to minimize customer contact with employees, Belk and other retailers are utilizing curbside pickup. The customer texts the store on arrival and employees bring out the merchandise to the purchaser in a designated parking space. There are also customer service setups located just inside the store’s primary entrance where customers can pick up their merchandise.
BOPIS reduces shipping costs, which can be considerable. Although some retailers charge for shipping, many others offer free shipping or free above a certain dollar amount of the purchase. Free shipping obviously affects the seller’s bottom line, but most large retailers have flat-rate shipping contracts with the national carriers. That helps moderate costs.
Retailers are also using stores as fulfillment centers to cut costs. They are shipping online orders from a store that has the merchandise in stock – bypassing a centralized warehouse – directly to the customer.
In some cases, many retailers are using same-day delivery to reduce customer trips to the store. The delivery scenario, however, is a two-edged sword. Retailers find that customers who come into the store will shop before or after pickup, whereas curbside pickup or home delivery reduces their revenue stream. Retailer analysis has shown that 75% of customers using BOPIS are likely to make an additional purchase, and 49% of shoppers made additional purchases while picking up their items in-store.
Also, when customers return an item purchased online to a brick-and-mortar store, they spend twice as much time as they did buying the item. The running joke among retailers is to deliver the wrong size, color, or item, thereby motivating the customer to return the item in the store and thus spend even more money.
As I wrote in a recent blog article, “May you live in interesting times” is supposed to be a blessing, but it has been used most frequently as a curse. These are crazy times for retailers and shopping venues. We need to face the realities of this crisis.
Retailers are looking forward to stronger holiday sales this year. According to Deloitte, holiday sales are expected to rise around 1.5% over 2019.
However, sales and holiday shopping will be somewhat different in the age of COVID-19. During this holiday sales period, look for early Black Friday deals and advertising, stronger customer and employee safety measures, and an even bigger emphasis on Omni channel sales and fulfillment. Here’s to a robust Silly Season 2020!
About the Author
Dr. Mark Gambill is an adjunct faculty member at American Public University. He has his DBA from Nova Southeastern University, a J.D. from Capital University Law School and an MBA from Xavier University. He teaches courses in management, law, ethics and real estate. Dr. Gambill has over 25 years of law practice and real estate development with several major shopping center owner/development companies and two major department store chains.