[US] Black Friday is eating away at Christmas shopping
- Black Friday week is stronger and longer than ever. Consumers are increasingly getting used to shopping at a discount.
- This year, Black Friday is closer to Christmas than usual. More people will be purchasing Christmas gifts at a discount.
- Brands and retailers need to be smart to ride the Black Friday wave without sacrificing margins.
Black Friday is right around the corner. Brands and retailers have already prepared their stock and staff for the big day and sent out campaign messages as early as two to three weeks ago. A few years ago, long lines and crazy fights at big retailers like Walmart or Best Buy on the first Friday after Thanksgiving went viral online, and many were shocked by the ruthlessness displayed in the pursuit of a bargain. In recent years, however, Black Friday has gradually shifted from a brick-and-mortar brawl to a more relaxed e-commerce fest. A survey from PwC suggests that 54% of consumers are planning to do their holiday shopping online instead of going to a physical store.
The total online sales for the shopping period between the 1st of November and the 31st of December 2019 is expected to reach $143.7 billion in the US, a 14.1% increase over last year. The National Retail Federation (NRF) estimates that more than 165 million people will shop over the five-day Thanksgiving weekend.
Despite Black Friday now spreading over a full week, the day of Black Friday could still be one of the biggest yet as this year; Black Friday falls on the 29th of November—just after payday for the majority of consumers. Incidentally, that means that Black Friday and Christmas are six days closer together, which means more people will be buying Christmas gifts during Black Friday. The overall forecast suggests a continuing trend in consumers’ behavior towards holiday shopping as consumers are shopping earlier, are more price-sensitive and are doing more of their shopping online.
Consumers are starting holiday shopping much earlier than before. A recent survey by NRF found that 56% of consumers have already begun their year-end shopping by the first week of November. Not only do they start earlier, but the spending budget is also projected to reduce, with many consumers trying to purchase their Christmas gifts at a discount. Survey results from Retail Economics have pointed out that 54% of buyers expect to spend less than last year, with 26% planning to get a deal during Black Friday, a 5% increase from 21% last year. These figures suggest that consumers are becoming more price sensitive. They shop when good deals are on the table instead of waiting until right before Christmas.
Big retailers are adapting to these behaviors. Amazon has moved on from Black Friday as a single shopping day to their Black Friday Countdown, which starts a week before the official event. Similarly, Walmart launches Pre-Black Friday deals with deeply discounted offers. And Apple, even though they don’t call them Black Friday offers, also announce their four-day promotional event at this time, starting on Black Friday and ending on Cyber Monday. On top of all these early activities, the success of Amazon Prime Day is shaping a new purchasing pattern—one in which consumers are looking for good deals all around the year.
These new shopping habits will take some time to become firmly positioned in consumers’ minds. At the moment, the period just before Christmas is still the most critical time for brands and retailers seeking to increase their sales revenue. 49% of shoppers said they would finish their shopping after the Black Friday week, while 15% are considering waiting to complete their shopping until after Christmas or the New Year. The total spending for this holiday season should remain as strong as last year at $1,284 per person on average. Millennials are even projected to spend more this year, and the same is true for Generation Z. The differences in these generations are in the way they choose to shop. Gen Z, for instance, prefers Google and social media over Amazon to check for price and product information.
Black Friday is still maintaining its popularity, and shopping will most likely happen during the period before Christmas. But this should change. Holiday shopping might begin as soon as there are good deals available. To optimize the sales revenue in the most significant shopping period of the year, brands and manufacturers need to consider the bigger picture of holiday shopping and come up with a strategic plan that spans the whole festive period. Read some useful tips for how brands and manufacturers can better manage their Black Friday e-commerce performance.
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