Why So Many Black Friday Deals Are Here Already
Black Friday may be on life support.
The day after Thanksgiving, replete with doorbuster deals at jam-packed department stores and long lines at electronics purveyors, has for years marked the unofficial start of the holiday shopping season. But Black Friday continues to diminish in importance for shoppers as major retailers start offering deals online right after Halloween in order to get the jump on one another and drive more holiday sales overall, and more people choose to shop on their mobile devices at their own leisure.
Black Friday was named for the start of the period when stores traditionally began to claim a profit for the year, with black ink used to mark profits by accountants, versus red ink for losses. But Black Friday shopping as a relic of years past is once again starting to take shape this November.
On Nov. 1, Walmart (WMT) began offering discounts on thousands of items online, including toys and electronics. For example, Apple's (AAPL) iPad Mini 2 is being sold for $199, down from $268. A 48-inch RCA smart TV could be had for $299.99 compared to $319.99 previously. At the top of its homepage, Walmart is promoting "hot holiday rollbacks all season long", likely in an attempt to reawaken sluggish sales in the U.S. before the holiday season kicks into gear.
Walmart's fiercest rival, Amazon (AMZN) isn't standing idly by. On Nov. 2, Amazon rolled out its new "deals of the day" holiday season promotion, which will lead up to its more serious discounts for Black Friday on Nov. 27.
Reminiscent of once popular flash sales, Amazon's deals are timed, in order to create a sense of urgency among gift-seeking consumers. Some of the first deals offered by Amazon include video-game Metal Gear Solid 5 forSony's (SNE) PlayStation 4 and Microsoft's (MSFT) Xbox One, which is discounted to $39.99 from $59. A pair of Saucony running sneakers is listed for $39.99, down from $70 previously.
While Walmart and Amazon do battle online for holiday dollars in the early going, Target (TGT) isn't joining the fray. The Minneapolis-based retailer began to stock its stores with holiday merchandise on Nov. 1, but isn't offering any specific deals in the weeks leading up to Black Friday. Target didn't return a request for comment.
Do you really still buy stuff on Black Friday anymore?— Brian Sozzi (@BrianSozzi) November 2, 2015
Meanwhile, department store retailer J.C. Penney (JCP) downplayed the declining relevance of Black Friday, saying via email that "Black Friday remains an important shopping period for the company."
"Black Friday is not dead, but it's definitely different -- I don't think it will ever die, but it has to change because customers are changing," said Kathy Grannis Allen, senior director at the National Retail Federation. Those changes to traditional Black Friday buying, fueled by a combination of more mobile shopping and earlier deals offered by retailers, were front and center during Black Friday 2014.
U.S. shoppers spent $9.1 billion at brick-and-mortar stores on Black Friday last year, according to data from research firm ShopperTrak. That represented a drop of 7 percent compared with Black Friday in 2013. In 2013, sales at physical retailers declined an even steeper 13.2 percent from the previous year.
Customer traffic on Black Friday has also declined by a similar amount, falling 5.6 percent in 2014 and 11 percent in 2013, according to ShopperTrak.
However, online and mobile shopping have surged. Online sales on Thanksgiving Day last year increased 14.3 percent over 2013, with sales on Black Friday up 9.5 percent year over year, according to IBM Digital Analytics Benchmark. Black Friday mobile traffic reached 49.6 percent of all online traffic, an increase of 25 percent from 2013. Black Friday mobile sales accounted for 27.9 percent of total online sales, up 28.2 percent from a year earlier.
"Black Friday is not irrelevant, it's just that a lot more people are [buying] on mobile devices," says Hannah Egan, product strategy specialist at IBM Commerce. Egan notes that mobile buying experiences have improved, as retailers have done a better job of targeting consumers with specific promotions on mobile devices.
Adds Egan, "the mobile device has become one's personal shopper -- those retailers that will win are the ones who treat their customers as one customer, offering good deals both online and in-store."
If traditional Black Friday shopping at physical stores is starting to become a thing of the past, there may be some distinct winners and losers from the retail sector.
Winners could include companies that sell electronics such as Best Buy (BBY) or Amazon, as consumers look for good deals on these products throughout November and December and not just on Black Friday weekend. On the other hand, companies hawking impulse items people would buy for themselves while they're out shopping on Black Friday, such as winter coats, boots and other apparel, may be hurt.
"Athleisure normally sells well over Black Friday weekend because it's never discounted," noted Allen, suggesting the likes of Lululemon (LULU) and Nike (NKE) could be impacted if fewer consumers are in the malls to buy yoga pants and joggers.
And this year, November may also mean another in which the Black Friday buying orgy fades further into the background of importance for retailers.