Black Friday profits were down this year, pretty dramatically. Bloomberg reports that sales were down by 11 percent compared to last year (which was down from the year before that), as six million fewer shoppers showed up.
That decline certainly isn’t attributed to the economy. While wages haven’t increased much the past two years, America’s unemployment rate has steadily dropped from 8.6 percent in November of 2011 to 5.8 percent in October of this year (the latest stats available).
When I saw those numbers, I assumed customers were going online, and Cyber Monday would be a big hit. While it is true that more customers are going online, theNational Retail Federation expects fewer people to shop online on Cyber Monday this year compared to last, with Forbes suggesting this could be the last year of the promotion.
What’s happening is not a drop in shopping; but instead, a drop in shopping on particular days that companies strongly suggest we should shop on. Why? Because consumers are more empowered than ever, and frankly, they don’t have to shop when a company says anymore.
The Specific Reason For Failure
Often, there is a specific reason something failed, which is part of a broader trend. The specific reason Black Friday fizzled and why I believe Cyber Monday may soon go away is because of one word: competition.
Originally, Black Friday was a day where you could get really good deals, if you were willing to wait hours in a line. That was a time with much less internet shopping and less competition where a few giant retailers could act as a cartel of sorts; with them all opening at the same time and creating the Black Friday experience.
But what happened is that the retailers stopped following the same rules, as they began opening up earlier and earlier to the point that some stores advertised “Black Friday Week” starting on the Monday before Thanksgiving. Additionally, online shopping exploded and companies were offering Black Friday deals accessible from the comfort of your own living room, so people no longer had to wait hours in line for a good deal.
The only thing Black Friday really has left to offer is an experience (and, in some cases, a tradition): for some people, it is exciting (or tradition) to wait in one of those big lines, rush madly into the store and get the best deals (which are probably available online). However, with less people partaking in Black Friday, the experience that goes with the retail-created “holiday” might soon fade as well.
Cyber Monday will probably fizzle out for the exact same reason. Companies will start holding “Cyber Monday” deals a week or two the actual Cyber Monday and soon the lines will become so blurred that the term will lose all real value. Again, it isn’t as if online shopping will plummet, but instead, that online shopping on a day selected by retail overlords will drop.
The Broader Takeaway
The last section dealt with the specific reasons Black Friday and Cyber Monday are suffering. But those specific reasons are part of a broader trend that retailers must heed: customers are more empowered than ever before, so the retail experience needs to be something truly remarkable to stand out.
For some, the Black Friday experience is remarkable, as they enjoy everything that goes with it. But for many more, the idea of waiting six hours with a bunch of deal-obsessed strangers isn’t exactly their idea of fun.
Amazon, which always seems to be on the forefront of everything, understands this perfectly. The ecommerce giant is using its massive database to make its site as customized as possible for each user, so people are only seeing exactly what they want to see. They’re proving that their most valuable asset might be their data, as they vie to create a shopping experience similar to what Tom Cruise experienced in Minority Report.
But they’ve already been doing that. What’s new is that Amazon has begun openingphysical locations in major cities for the holiday season that feature items people prefer to touch – such as clothes and shoes. However, it will just be essentially a showroom, where people will select an item and then buy it online (shipping is both “fast and free”).
But what really makes the stores unique is that they feature free food, drinks and entertainment, along with a giant fake Christmas tree and fake snow in the parking lot (even at their Las Vegas location). Again, it is about selling an experience, not just a product.
The lesson
Consumers, with access to thousands of competitors within a few clicks, have more options and information than ever today. Gone is the effectiveness of traditional advertising and retail-created events like Black Friday; in is content marketing, customized sites and fake snow in Las Vegas, all focused on creating a great experience for the customer.
That’s great for customers, as they get lower prices and a better shopping experience. But it is scary for businesses, because if they don’t continue to evolve and offer something truly remarkable, they’ll be pushed out faster than ever before.
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