A few years ago, U.S. retailers opened Pandora’s box and opened on Thanksgiving Day. They expected to expand the “official” kick-off of the holiday shopping season. Many chose not to open on Thanksgiving and those that did opened in the evening (8 pm the first year), inching back to 5 and 6 PM last year. Some brave retailers (K-Mart, Old Navy and others) were open much of the day. Opening on Thanksgiving has not given retailers the results they were hoping for but has given them a brand and image headache. Do I open on Thanksgiving? The answer isn’t simple.
Results from Last Year
Retailers reasoned that opening on Thanksgiving was a good thing because shoppers were home most of the day and aside from watching parades, football games and cooking and eating the Thanksgiving meal, there was a lot of sitting around. Plus, they reasoned, many shoppers don’t want to get up at 4 AM for “Door Buster” specials on Friday morning. Finally, e-commerce retailers are open 24/7 365 days a year.
Unfortunately, the results haven’t been what retailers expected. Yes, over 40 million Americans went shopping last year on Thanksgiving Day and bought a lot of merchandise. However, overall Black Friday weekend sales were flat. This means that retailers were open extra hours and drove NO incremental revenue. Plus, many American’s took to social media to vent that Thanksgiving is one of the big three holidays left where families should be together. So not only does this break up the holiday but many family members who work at these retailers (yes, Target, Wal-Mart, Sears, Best Buy, Macy’s, etc.) needed to be at work far earlier than the store openings to get everything ready. Overall, this resulted in a lot of bad publicity.
Options for Retailers – Two Camps
If retailers want to win, the answer is simple. Stay closed on Thanksgiving since they are not getting incremental sales – shoppers tend to have fixed budgets. Leverage online and mobile shopping deals with evening specials (e.g., 9 pm) so that families can end their time together and the intrepid ones can go online later to shop. However, this is fantasyland since retailing is essentially a zero sum game and once Pandora’s Box is open, it’s difficult to close…but maybe not for some.
Specialty and high end retailers (i.e., those with higher than average brand loyalty) have taken the high road on Thanksgiving. Led by Nordstrom and Costco, these retailers have taken a stand for Thanksgiving and family togetherness when the first retailer announced they would open on Thanksgiving. This is part of their culture and reinforces their respective brands. They have been steadfast in their outspoken criticism of the importance of staying closed on Thanksgiving Day.
Other retailers have gone a step further and will not only stay closed on Thanksgiving but not open at all or much later on Black Friday. REI, true to their brand, will not open Thursday OR Friday and suggests that their shoppers go out and enjoy the great outdoors. Other specialty retailers like GameStop and Staples will open later on Black Friday, giving their employees a well-deserved rest and their reputations a nice pat on the back. These retailers have found that this is good brand policy and doesn’t hurt their overall holiday sales. These outlets provide a distinctive brand experience that shoppers love.
On the other hand, big retail brands (e.g. those with average or worse brand loyalty) would struggle to close on Thanksgiving. The mass merchants (Target, Wal-Mart) and department store (Sears, Kohl’s, Macy’s) have Amazon to thank. The shopping experience at these retailers isn’t particularly differentiated and they have much to defend. For these retailers, being open is a something they have to do…meaning that if one opens, they all have to open. Otherwise, they will forgo sales. The real question is how much do they want to intrude on our Thanksgiving Day? Too much and there is a backlash, even from eager shoppers.
However, they’re trying to make shopping on Thanksgiving a bit more rewarding. This year, Wal-Mart announced that they’re pulling up some of their best “Black Friday” deals to Thursday. Other retailers have started (as early as today) to announce specific Black Friday specials that can only be ordered online. In fact, several retailers will ambush everyone and provide some of the best deals of the shopping season the Sunday before Thanksgiving. While consumers benefit, they are becoming more confused.
Outside of specialty retailers, this has changed what consumers expect from retail brands. Everything seems to be on sale all the time. The term “Black Friday” is now code for a great value or deep discount. So this means that the kick-off the holiday shopping season started sometime after Labor Day and consumers have been selectively stocking up. According to the National Retail Federation, by Thanksgiving, the majority of women have already finished their holiday shopping. After the Black Friday/Cyber Monday weekend, that figure climbs to 86%. Since the recession, consumers have been conditioned to look for value and they’re vigilant all year…with 16% purchasing holiday gifts before September!
All this has done is dilute big box and department store brands. While the case for them to stay closed on Thanksgiving is compelling, the competitive environment won’t let them. It’s a vicious cycle. Usually these retailers make 20% or more of their revenues in those last 5-6 weeks of the year. And to put it directly, this means Wal-Mart would forgo nearly $1.5 billion in revenues in the US alone by staying closed on Thanksgiving. Bottom line, if consumers have the heart for it, the deals are there!
We would love to know where you stand on retailers being open or closed on Thanksgiving Day and why!
Our Report on KUSI-1/11/15:
KUSI News – San Diego, CA