Black Friday: It’s Giving me a Headache

Every year around this time, I write about my pain, suffering and despair.  I am a strategist, and it is my job to help companies optimize their enterprise value.  I have found Black Friday to be personally repugnant. It makes me want to vomit.

And this year was even worse. First Black Friday was a day, and then it was a week. Now it begins before Thanksgiving, and extends through New Year. I have an idea, what if all of the world’s retailers just put everything on sale for the entire year? That should do it. Then, during some special period in December, they could do a 2x sale or a 3x sale, and sell everything below their cost. Yes, let’s magnify the race to the bottom and get there as soon as possible!

Maybe all of these retailers should just admit it.  They have not figured out how to compete with online retailers who are shipping merchandise for free. Wal-Mart and Target (who are waving shipping charges during the Holidays) have to keep pace with Amazon and the other eDiscounters.[i]

You will hear analysts try to rationalize this crazed phenomenon. It builds “store traffic” they will tell you. It allows the retailer to build loyalty and up sell other items. Really?  Is anybody buying anything at full price at 2 AM?  Retailers are trying to defuse the ticking time bomb of people camping outside of their stores and fighting like thugs over flat screen TVs.  Have we gone mad?

Discounters are trading margin for volume; to what end? Wal-Mart has had seven consecutive quarters of the same flat store sales, and Best Buy may be in deep trouble. It is hard to see how this strategy is showing any sort of long-term benefit, other than defending their turf from other retailers.  There is a fundamental lack of business model innovation coming from retailers; disruption is coming from outside their walls.

A 2013 survey showed that 77% of consumers “showroom”, meaning that they walk physical stores with the intent of buying their merchandise online.[ii] For retailers to turn the tide, will require that they find a way to comingle offerings in-store and on-line.  The phenomenon is challenging the concept of retail itself.

What traditional retailers really need is a fundamental shift in their paradigm. Someone will figure out a way to create a showroom that facilitates seamless transactions with consumers, shipped directly to their front door. In the past, the last mile of distribution has been the most expensive, meaning that it is more costly to ship a product than for a consumer to pick it up.

Yet, the last mile of distribution rule may be losing out in a war of attrition, and retailers should find a way to blend digital and physical assets more productively.

Marc Emmer is President of Optimize Inc. Optimize Inc., a management consulting firm, specializing in Strategic Planning. Marc can be reached at marc@optimizeinc.net.

[i] Wal-Mart Black Friday Is Spread Over Five Days-The Wall Street Journal

[ii]  62% of Shoppers Use a Mobile  Device in Stores to Check Prices -Marketingproofs.com

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