Is Black Friday Dying?
REI has been touted in the news for “shocking the retail world” by announcing it will be closing all its stores and won’t process any sales from its website on Black Friday and paying employees to #OptOutside. The lifestyle brand is also encouraging its customer base and other retailers to join the movement. REI closed out last year with $2.2B in sales, with Black Friday coming in as a top 10 sales day. But, CEO Jerry Stritzke states, “We define success a little differently. It’s much broader than just money; it’s how effectively do we get people outside.”
What does this mean for the biggest shopping day of the year?
REI has started a conversation in the retail world – how far is too far to make a sale? The decision aligns nicely with some trends noted by the National Retail Federation. They predict that there will be $105 billion in online sales this holiday season- an 8% increase from last year, while brick and mortar stores saw a 7% decline in visits last holiday season. Online and omni-channel retail channels will are continuing to surge, while the brick-and-mortar sales are struggling. This clear shift to digital indicates that Black Friday is becoming less important as a single top sales day, and more of a piece of the holiday shopping month.
Other retailers are also reigning in their brick and mortar hours over the Thanksgiving holiday. Stores like Nordstrom, Home Depot, and Burlington Coat factory have gone so far as to “shame” their competitors who decide to open on Thanksgiving to get the competitive edge, saying they are “Ruining Thanksgiving.” None of these retailers, however, have ever taken their online stores offline for the holiday meaning that some staff will be working to assist with customer service and web support.
REI is reacting to market trends.
Omni-channel and mobile commerce are no longer far-off trends in the retail industry; the future is now. In fact, Adobe predicts that 51% of all e-commerce sales this holiday season will be via mobile. Holiday shoppers will even leverage mobile devices to assist with in-store shopping at a higher rate. If customers try to navigate to your website via mobile and the experience is poor, they will quickly run to a competitor. By taking a holistic approach to optimization (instead of optimizing for different devices separately) companies can start ensuring every end user has a seamlessly delightful experience with their brands. There is a lot of speculation around why REI chose to do this – what’s the angle? Most likely, money will be lost in the short term, but the benefit will be seen in the long term because of all the kudos they’ve been getting. REI’s 5.5 million members, which make up approximately 80% of its sales, already support the cause, and potential customers are saying they will buy from REI before and after the holiday to support the cause. In my opinion, REI’s strategy is to reinforce the brand with is loyal customer base, and retain new customers through the holidays, instead of banking on the sales of bargain shoppers with no brand loyalty. The “wallet expansion” trend is much more profitable than bargain shoppers in the long run. In fact, last year veteran online shoppers increased their average online purchase by 10%. Right now, the jury is out on the intentions behind REI’s decision and how it will affect the brand’s reputation and bottom line. If REI can maintain a seamless omni-channel presence through the holidays, and keep its customers happy, I bet you’ll see a lot more lifestyle brands following suit next year.