Better vs. Bigger: Examining the Future of Black Friday

Like many things in 2020, the holiday shopping season will be unlike any in recent memory. The COVID-19 pandemic has turned many of our social norms upside down and accelerated emerging trends, exacerbating weaknesses already evident in retail. With the bar now higher than ever before, retailers need a seamlessly integrated omnichannel offering just to survive, and must remain agile in the face of ongoing uncertainty.

Well before COVID-19 hit during this year's first quarter, brick-and-mortar retailers faced a broad array of challenges that together posed slow-burning, but existential, threats. Retail footfall steadily declined from 2018 to 2019 as consumers continued to embrace e-commerce. More recently, ShopperTrak data has shown a recovery in foot traffic, with wide variations by region based on the COVID-19 safety precautions that are being taken in each of those states. Online retail has made “going shopping” more stressful, burdensome and expensive. It has also made prices — as well as margin and markups — more transparent to consumers. The growing number of ghost malls and struggling Main Streets have become bellwethers of where consumer purchasing behavior will head next.

Many retail experts anticipate that the holiday selling season will begin earlier than ever, as consumers aim to get a head start on shopping before the crowds follow. Navigating city and state opening and closing guidelines mid-pandemic won't make it easier for brick-and-mortar retailers.  Recently, I took my teenage daughter on a shopping trip to a mall in New Jersey — no problem, the shopkeepers were happy to see us! Two days later, we went to a local mall in Staten Island and ran into a closed mall aside from stores that had "exterior entry" doors.

As we approach the busy holiday selling season, retailers should embrace the new demands that the pandemic has imposed on us all and harness this new reality as a spark to innovate. Before COVID-19, Black Friday had begun to level off, with deals stretching into and beyond Cyber Monday. While it likely will remain a fixture of the commercial calendar in years to come, Black Friday seemed to have found its natural level last year.

This year, there's some hope that the date will mark the starting gun for economic recovery, provided no second wave of COVID-19 emerges and confidence improves. While the stock market has recovered from the March swoon, the employment picture remains uncertain for many, with recent unemployment rates hovering at 8 percent. The stalemate in Washington, D.C. around extending additional unemployment compensation to U.S. consumers might mark a potential headwind to a robust holiday season.

Consumers may have nostalgia for Black Friday, but retailers likely will have mixed feelings. Black Friday is a margin giveaway in the run up to Christmas, but many retailers have felt forced to participate as they're stuck in kind of a prisoner’s dilemma with competitors. The upside of Black Friday can be smaller than it looks. We've worked with clients for whom up to 45 percent of Black Friday revenue is simply displaced from the weeks before and after the event.

While no one can predict whether Black Friday will get bigger or smaller this year, we do expect to see more variation in the results. Some retailers may choose to “sit this one out,” while others will try to recover ground on their revenue target. Inventory will play a major role. Some non-food retailers may have excess stock from earlier in the year, while others have already trimmed orders. Outcomes will depend on specific circumstances, and only time will reveal this year’s impact on the future of Black Friday.

Jed Meyer is managing director, North America, at Ebiquity, a marketing and media consultancy that harness the power of data, analytics and technology to improve marketing performance.