Economist: Black Friday is Retail ‘Arms Race’
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowAn Indiana University economist says, despite objections, the decision by many retailers to open on Thanksgiving Day is “reinforced” by consumer spending. Center for Education and Research in Retailing Associate Director John Talbott says if the trend continues, more will follow suit. At least one major retailer is planning to open tomorrow at 6 a.m.
November 26, 2013
News Release
Bloomington, Ind. – More major retailers have decided this year to begin the holiday shopping season earlier, on Thanksgiving Day.
While most retailers, such as Walmart, Toys R Us, Target and Best Buy, will open in the evening after many families have gathered for Thanksgiving dinner, Kmart has announced plans to open at 6 a.m. that day.
Among the reasons that companies are citing for their decision is that there are six fewer days between Thanksgiving and Christmas this year. John Talbott, associate director of the Center for Education and Research in Retailing in Indiana University's Kelley School of Business, isn't sure whether being open on Thanksgiving will move the needle upward when it comes to holiday sales figures.
“The Black Friday season is truly a retail arms race. Many studies indicate that the consumer has a relatively fixed level of spend for the holiday season,” Talbott said. “Consumers spend the budget they have in the time that is available for them to do it.”
Talbott said it has been proven that holiday sales aren't affected when the shopping season is condensed and includes fewer weekends. Even weather has little effect, although retailers will always point to this issue when they don't make sales objectives.
“Over the last few years many stores have begun opening earlier and earlier in an effort to improve their performance during the holiday season. Despite objections from some, the reality is these efforts are reinforced by consumers attending these events and spending their money,” he said.
“If society at large wants to change this sort of behavior, the problem can easily be solved by simply not shopping on Thanksgiving Day. This will end the experiment, and chances are other retailers will not attempt it in the future.”
Talbott suspects that people who come out to shop on Thanksgiving simply are shifting their retail strategy from Black Friday. They won't expand their shopping plans simply because of the expanded holiday weekend store hours.
But he also thinks that holiday shopping on Thanksgiving Day could be here to stay.
“If shoppers vote for Kmart to be open by spending big dollars there on Thanksgiving, it is essentially a spend that is being reallocated from other retailers to Kmart,” he said. “This is likely to force a competitive response in the future so that the fixed spend of consumer dollars available are not sent in the direction of a specific retailer simply because they offer their deals to consumers earlier than others.
“My guess is Kmart will open at 6 a.m. and stay open 41 straight hours, shoppers will buy, and next year we'll see other retailers follow to rebalance the competitive playing field.”
If you have to participate, mind your physical — and mental — health
Indianapolis, Ind. — Many Americans “embrace their 'stuff' and love a deal and an opportunity to shop for a gift at a low price,” said Nancy Barton, lecturer in the School of Physical Education and Tourism Management at Indiana University-Purdue University Indianapolis. But the stress that accompanies Black Friday shopping can add hidden costs.
While retail stores are raking in the money, shoppers are probably having a more negative experience.
“It is likely Red Friday for the consumer, as the shopper goes into debt to pay for purchases,” Barton said.
Besides overspending, four people have died and dozens of injuries have occurred in the Black Friday shopping frenzy in the past four years. Judging by the trampling of a Walmart worker in Long Island, a collapsed man bypassed by shoppers at a West Virginia Target and a shooting at a Toys R Us over an item brawl, both consumers and stores are clearly unprepared for the excitement.
“Some have argued that we are wired for desire as a result of our dopamine reward pathways,” Barton said. “When we are overstimulated by a novel experience or unlimited choices on Black Friday, a craving (for more) and insatiable desire is triggered.”
Barton said the key to combatting these desires relies on the executive, thinking part of the brain. However, this control can be hindered if you are stressed out, tired and hungry, arguably the three main traits of an all-night Black Friday shopper.
She offers this suggestions:
•Consider opting out of Black Friday shopping. “Can't we think of another way to give a gift? The answer is: 'Yes we can!'” Barton said. “There is evidence that experiences — not things — make us happy. Experiences are generally more social. They are likely to be a shared moment, anticipated or relived.”
•Try some self-reflection. “The perfect antidote for ungrateful feelings is to practice a gratefulness meditation,” Barton said. “Every day, list three things that you are grateful for. Embody the feelings of gratefulness. Positive emotions and satisfaction with what you already have start to unfold as you reflect on your list.”
•Stay healthy and buddy up. “Aim for fun,” she said, “because friends, family, companions and social connections are health promoting.”
Source: Indiana University