With the Thanksgiving holiday falling during the last week of November, this means there are six less days to shop between Thanksgiving and Christmas.
LSU Associate Professor in Marketing and Director of Graduate Studies in Marketing Dan Rice shares his expertise and tips for this year’s holiday shopping during Black Friday and Cyber Monday.
The National Retail Federation said last month it expects holiday retail sales during November and December to increase between 3.8% and 4.2% over 2018 to a total of between $727.9 billion. What are the causes for the increase?
There are a number of things that can affect these predictions. This year it seems that there are at least two major drivers that can help explain part of this puzzle. First, consumer confidence remains high, and secondly the unemployment is at historically low levels. Both of these help to predict a good holiday season. However, on the opposite side of the equation, the holiday period is shortened compared to last year due to the late date of Thanksgiving. Overall though, it appears that most predictions are for a good year.
How will the later Thanksgiving and Black Friday impact spending?
Retailers count on the holiday season and with six days less this year between Thanksgiving and Christmas, they have to do something to make up the difference. I think this is a big part of why you see so many early and longer sales this year. Another interesting thing I’ve noticed is the number of manufacturer-based discounts occurring across many retailers that often put them at parity for the product itself, but then makes the choice more about the extras that the retailer might provide.
What can we expect for Black Friday shopping in Louisiana?
A few interesting trends are occurring across Louisiana and the nation as a whole this year. One is the continued gains of internet sales. While most areas of retail are expecting an increase over last year’s sales, the percentages for online sales as a whole are increasing at a rate somewhere around three times the overall sales increases predicted by the National Retail Federation, or NRF. Another trend is how many of the sales for Black Friday this year have started earlier and may end later. This might be an attempt to give people more time to make the decisions or be aware of more deals that they can then take advantage of. It can be hard to evaluate all the deals you’d like to consider in one day. Conversely, many stores have cut back the store hours for their in-store sales – some not opening at all on Thursday, some opening regular hours on Friday, and some like REI (which isn’t in Louisiana) will not be open on Black Friday at all to allow employees to have more time with their families. Of course everyone’s favorite trend of crazy crowds in stores is likely to also continue.
Overall, are people spending more or less money during the holiday season? Why is that?
The predicted increase in spending on average per person is in line with the market predictions; it’s expected to be up about 4% to right around $1,050 dollars according to the NRF. This makes sense with a positive outlook and the low unemployment rates. Of course, these predictions vary some with variables like age (35 to 44 year olds tend to spend the most, a bit over $110 more than the overall average) and sex of the consumers. Men are predicted to spend a bit more than women.
In terms of holiday shopping, are there any trends?
It seems that both consumers and retailers are starting to stretch the big holiday shopping season. Nearly 40% of people surveyed by the NRF planned to start holiday shopping in October or earlier, with 20 percent answering September. Retailers are potentially trying to take advantage of that and combat the shorter traditional holiday season with these extended sales. Walmart started some of their sales before Halloween this year.
What will be bigger: Black Friday or Cyber Monday?
The specifics of the different predictions vary considerably based upon which group is doing the prediction, but they’ll typically look at how last year’s sales went and how factors that affect consumer spending have changed over the course of the year. For a long time, the rate of growth of internet sales has exceeded brick and mortar sales growth, but both are still pretty profitable. For example, according a recent CNET.com article in 2018 Cyber Monday sales hit $7.9 billion, more than the Black Friday 2018 $6.2 billion take, but both were new records. With the recent trends in internet sales, I’d expect the gap to still favor Cyber Monday and grow a bit.
How can stores compete with Amazon?
Amazon is certainly a behemoth, but a lot of success is being able to beat competitors in particular areas to deliver value. For example, Amazon is great for things that are easy to ship and install, but not great for major appliances. In these cases, services like install and haul away, in addition to being lucrative for the retailer, can be quite valued by the customer and Amazon might not have the same capabilities that the big boxes do in those areas. Similarly, if you’re doing last minute shopping, you might not be able to wait for Prime (or even overnight) shipping to get the present on time. In those cases, retailers with attractive last-minute deals could have the upper hand. It seems like the brick and mortars might have an opportunity to have last minute announcements for deals that could bring some extra revenue. Additionally, having shoppers walk through your store may give them more opportunity to buy unplanned items than web searching. This is likely part of the reasoning behind Kohl’s agreeing to accept Amazon returns. If you come to their stores to return things, you might end up shopping and buying something while there.
Two years ago, you spoke about online versus in-store. Is there anything new in that realm, or is internet the best way to get attention and sales?
Well, there’s always something new going on in retailing I suppose. I don’t think there’s necessarily a “best way,” as there’s many effective ways to drive sales. For example, you might have a deal on your website that advertises a particular price that you have to go to the store to purchase. Similarly, flyers at your stores that people pick up when they shop or coupons that they get when checking out of a store could both drive people toward special deals on the company website so it goes both ways.
Any final thoughts?
Don’t think just because the retailer says it’s a good deal or that it has a huge claimed markdown that it’s a price you’ll never see again. Many of the items that are on sale every year (e.g., appliances, electronics, cell phones, etc.) are ones that are predictable. If you know you need a new washer, for example, start looking months early if you can and compare prices over a long time to be able to be in a better position to determine how great a deal these advertised deals are. Also, be careful about buying a substitute item if the deal you want is gone without doing research, and know what the accessories really cost. For example, HDMI cables are a prime mark-up item in-store with your TV, but you can usually save 90% for similar cables online.
Lastly, be on the lookout for fakes and scammers. If a deal is too good to be true, it might just be that. There have been fake websites set up to steal money and fake card swipers at various locations (including one potentially at a local gas station recently) can also do damage. Holidays are a big shopping time, but be careful because they are also an opportunity for crooks.