Black Friday Started Early This Year
Retailers Already Rolling Out Black Friday Deals
The day after Thanksgiving has traditionally marked the kickoff for holiday shopping, when consumers flock to stores in search of bargains. But Black Friday started early this year. Retailers including Walmart (WMT) and Target (TGT) have been rolling out deals since October.
Many of these deals are the same as what consumers will see on Black Friday. In October, retailers started offering discounts of between 5% and 10%. For Black Friday, discounts are expected to be in the 5% to 25% range.
Black Friday had been losing its luster even prior to the pandemic. Ecommerce sales on Black Friday surpassed in-store sales for the first time in 2019.
Ecommerce Steals Black Friday’s Thunder
The popularity of ecommerce surged during the pandemic and many consumers have stuck to their online shopping habits. This year, online sales on Black Friday are expected to increase 5%, hitting $9.5 billion. Retailers are limiting Black Friday store hours and reducing their discounts in response. Demand is high heading toward the holidays, giving retailers little incentive to lower prices.
Walmart and Target are instead investing heavily in ecommerce, making sure consumers can place orders online and pick them up on the same day. This requires a lot of workers to package and deliver curbside orders.
Best Buy’s Strategy Backfires
Extending the Black Friday deals throughout the month alleviates pressure on retailers, freeing them up to focus on their ecommerce initiatives. But this strategy is having a negative impact on some of the companies’ bottom lines. Best Buy (BBY) said that early Black Friday deals, in addition to increasing shipping costs, will hurt its gross margins in the fourth quarter. The electronics retailer is also having a hard time getting ahold of appliances, gaming devices, and smartphones, which is hurting sales.
Black Friday may not be the big sale event it was in years past. That does not mean shoppers won’t be spending this holiday season, but their spending patterns will look different this year, and probably in future years too.
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