The holiday season is in full swing, with pumpkin spice everything and Halloween decorations taking over retail stores everywhere. Promotional calendars have been slowly inching back for the past several years. First, shoppers got a jump start on holiday shopping the day after they sat down to Thanksgiving dinner with friends and family. Then some shoppers started lining up and waiting for stores to “open, open, open” on Thanksgiving night, while the stragglers were still putting away leftovers.
Opening on Thanksgiving afternoon was the next frontier. Many retail analysts predict that Black Friday 2017 will be the biggest shopping day of the year, as it was last year. However, there is a different faction within retail that believes that these shopping holidays have all but lost their luster. What is causing this shift, and what can retailers do about it?
Holiday promotions malaise
As retailers have competed to open ever-earlier on Thanksgiving or even offer Black Friday deals in the days and weeks leading up to it, one message has been relayed loud and clear to shoppers: There will always be deals. If Black Friday deals were truly the best ones of the year, shoppers would come out in droves and stock up far beyond their holiday needs.
But in reality, Black Friday deals feed into the industry-wide psychological pricing phenomenon. These deals seem too good to pass up, yet there are other sales throughout the year that also attract plenty of shoppers. Is this because consumers really need the items they buy around Memorial Day, for example, or because retailers did an excellent job of tapping into shopper emotion to trigger those purchases?
That may be a bigger question than we can answer here. But overall, the extended holiday promotional calendar that has become the norm is causing what brand expert Denise Lee Yohn calls “deal-fatigue.”
The urgency of holiday promotions
Retailers have time on their side. Shoppers want to get gifts in time for specific holidays, so even if they don’t jump at Black Friday promotions, chances are they’ll make at least some purchases between Thanksgiving and Christmas. Some consumers stretch their holiday purchases over months. A Coinstar survey found that over 25% of U.S. adults stockpile discounted holiday gifts over the course of the year, with 33% spending the extra time to find the right gift and 27% waiting until they go on sale.
The original point of Black Friday is to push retail sales volume out of the red and across the threshold to the black. But should retailers bet it all on such a short period of time? Since Cyber Week does so well, it clearly isn’t a bad strategy—but it doesn’t exactly inspire consistent confidence.
An increasing number of retailers are now announcing that they’ll be closed on Thanksgiving. Sporting goods retailer REI took it a step further, closing on Black Friday and encouraging customers to enjoy some time outdoors instead of shopping. (The company saw substantial recognition and returns from the marketing campaign in-line with this move.) It’s interesting to note how holiday promotion trends have changed, from every retailer clambering to get in on Thanksgiving Day sales to giving employees much-needed time with family before the busy holiday shopping season.
How to avoid the holiday promotion rat race
If all your competitors are offering the same commodity products and (un)intentionally driving prices down, margins and brand value will be depleted in no time. Sure, Black Friday is a day when shoppers expect bargain-basement prices from virtually every retailer, but REI’s absence from Black Friday offers an additional lesson: Instead of competing on price wars, the company is demonstrating its company values.
On the flip side, Amazon is a major force in expanding the holiday promotional calendar, but the e-commerce giant has also created its own holiday. When Amazon initially introduced Prime Day, competitors scrambled to try to offer deals that could stand up to the behemoth. Since then, competitors have wised up and planned ahead so that Prime Day no longer shakes them to their core. As Amazon follows the retail trend of making its proprietary holiday longer, competitors can step into the competitive market and carve out a space where they can build marketing buzz with their own retail holidays, without erasing margins.
The retail industry is beyond crowded, and as the holidays approach, offering unique promotions will become the best way to stand out from the noise. Holiday promotions don’t need to come with cautionary tales of 3 am customer stampedes; instead they can return to the joy we experience when we find the perfect gift for someone close to us.
To avoid “deal-fatigue,” retailers need to create their own deal days and deliver enjoyable experiences. Make the most out of the holiday-inspired traffic boost, and form a connection that elevates you out of the rat race and fosters loyalty that lasts year-round.
For more on retail industry trends, see Seven Facts In Retail That Demand Change.