2016 Sales Data Provides Retailers a Compelling Reason to Open on Thanksgiving
While it's already February, we still have 2016 on the mind. Since the trend to open stores on Thanksgiving Day is only a few years old, it’s a reasonable question as to whether this is a passing fad or it’s here to stay. This year, some retailers which had previously opened on Thanksgiving decided against doing so for a variety of reasons — from respecting an American family tradition to not being able to justify the cost to (in some New England states) blue laws prohibiting opening a store on a national holiday.
To understand whether the effort to open was justified, NPD Group analyzed actual receipt data hour-by-hour from Thanksgiving through Black Friday, tracking the last three years of this two-day shopping event. Though the numbers didn't change too much year-over-year, what they boil down to may come as a surprise to some.
The most compelling finding was that more than 30 percent of the two-day overall spend took place on Thanksgiving Day. This alone is a convincing case to be open for business on the holiday. It’s a large share of the two-day pie, and retailers must therefore carefully weigh their decision given the portion of spend they risk losing.
We also found that while Thursday and Black Friday taken as a whole get a high level of spend, Thanksgiving Day shopping is mainly an early evening event, and it’s characterized by intense competition. On Thanksgiving 2016, shopping was highly concentrated in the evening hours, with roughly 59 percent of shoppers visiting only one store. An additional 24 percent visited a second retailer. Between the hours of 6 p.m. and 11 p.m., this targeted shopping accounted for 21 percent of the overall two-day spend.
While Thanksgiving Day spend has declined steadily over the past three years, the biggest drop occurred between 2014 and 2015. Checkout Tracking data shows that spending between the hours of 6 p.m. and 11 p.m. went from 27 percent in 2014 to 21.5 percent in 2016. Looking closely at this time period, each hour shows a drop in activity between 2014 and 2016. At 9 p.m., spending dropped from 4 percent in 2014 to 3.8 percent in 2016; at 8 p.m., it dropped from 5.7 percent in 2014 to 3.4 percent in 2016. Between 2015 and 2016, the numbers become more consistent. That said, again, the share of spend is still meaningful.
Part of the decline in the three years we analyzed can be attributed to the fact that back in 2014, Thanksgiving Day shopping was a relatively new event. Consumers still had an early doorbuster mentality. As people realized that there were enough promotions and inventory to carry them through both days, the emphasis on getting there first started to wane.
The biggest difference we found last year is that shoppers visited fewer stores. There were obviously some great promotions that got people out of their houses, but people were selective about where and when they went shopping. What the data overwhelmingly indicates is that the majority of shoppers were motivated to go out because of a compelling promotion, and given most visited a single store, clearly the mind-set was to avoid doing a shopping marathon.
While retailers have conditioned the public to expect Thanksgiving deals, and compelling promotions are an important way to grab an earlier share of spend, they need to be augmented by a compelling online strategy that runs counterpoint to the physical strategy. Our hourly transaction data suggests that retailers should focus brick-and-mortar on those early evening Thanksgiving hours, and focus online promotions on those other times.
Additionally, considering that 46 percent of the overall two-day spend occurred on Black Friday during the hours of 9 a.m. to 6 p.m., there appears to be a groundswell of shoppers refusing to participate in the sometimes crazy after-midnight sales that characterized many previous Black Fridays. Some of the promotions are now starting the prior day — on Thanksgiving. Add to that the online component, and the new two-day Black Friday shopping event becomes if not a more sane shopping experience, a more civilized one.
Andrew Mantis is executive vice president of NPD Group’s Checkout Tracking, a data service that measures consumer buying behavior at the market basket-level, based on receipts for both online and brick-and-mortar retail purchases.