Black Friday: Will Retailers Gain the Profits?
Black Friday, an American shopping event, is one of the most awaited shopping festivals with exciting discounts and offers. Offering products and services at lower prices attracts customers through customer engagement programs. It often comes before Christmas which in turn predicts the Christmas sales. Since it comes in the second quarter of every year, sales are estimated to be high, and good profits are generated for retailers like Walmart and Target. In simple terms, we (Indians) can relate this festival with “Diwali”, since both are celebrated in the same season.
This year (in 2024), black Friday was celebrated on November 29 which is 26 days ahead of Christmas. This situation left the retailers in a dilemma, which competitive strategy to follow and offers to be disclosed. Parallelly, this creates inflated sales in the concerned markets. Retailers expect good profits with good consumer footfall at their outlets. This situation results in either aggressive marketing or keeping the retailers at a loss. As per the resources from the U.S., it was expected that this year the sales would be hitting 1.5 times the previous year.
Walmart, one of the most widely scattered supply chain retailer companies in the U.S., opens its outlets at 6 a.m. to predict good sales. This time it came up with heavy discounts on Samsung TVs, Dyson Vacuum Cleaners, Levi’s Jeans and Air Fryers. Welcoming the customers with decent offers, Walmart presumed high traffic for Black Friday. Because of its widespread network, Walmart took the majority of the revenue on Black Friday. To enhance Customer services, Walmart provided personalized search where Customer stores were designed, Gift Finders were there, which gave customized lists for the shoppers, and a Holiday Wish List for family and Friends.
On the contrary, Target another U.S.-based retail company that stands equal to Walmart, started its offers by providing 50% Discounts on products and services. It emphasized products like home décor, kitchen products, tech, and toys. Target specially offered Taylor Swift items like: “Taylor Swift: The Eras Tour Book,” and “The Tortured Poets Department: The Anthology”. They all were solely available at Target outlets. Deals like 50% off on select holiday trees, 50% off Target Circle 360 membership, 30% off on LEGO sets, 20% off on select bikes, and Up to 35% off on TVs, sound bars and streaming devices attracted dozens of customers during the three-day sale.
Conversely, online shopping allows the customers to get the products at their doorstep, which in turn generates lower revenue for the outlets. Having less time, most of the shoppers order the products online to mitigate the efforts. Retailers like Amazon, grab buyers with exciting offers on premium products like a Leather handbag from Coach, Technivorn Moccamaster, Madrigal House from LEGO, a dumbbell set from CAP, and floor cleaner from Tineco.
Based on the past analytics of 2023 Black Friday, consumers had spent around $9.8 billion. And this year it was forecasted $10-12 billion.
As consumer spending results in growth in the economy, personal expenditure is almost 68% of the GDP of the U.S. The Fear-Of-Missing-Out (FOMO) makes the consumers buy the products within the stipulated time, as there is no second chance. Retailers catch this emotion and use it as a tool to drive sales and provide limited-time offers, as we saw in the case of Target.
Black Friday had a major influence on the retail business. It has changed how merchants see Christmas shopping or Diwali shopping, emphasized the significance of the holiday shopping season, and encouraged shops to provide online buying choices. As a result, Black Friday has become one of the most important shopping days of the year, significantly influencing how people buy today. Overall, it has changed the way people see and engage in shopping.
~ By Santiswaroop Pandi, IMS Ghaziabad