A Blog by Jonathan Low

 

Nov 19, 2016

Black Friday's Inside Secret: Retailers Repeat the Same Deals Every Year

It's that time of year... And it may just be that consumers dont care if the deals and prices are always the same: meaning the occasion is more of a social and cultural event than an economic one.

On the other hand, the fact that so many retailers have cancelled Thanksgiving Day shopping and rolled back Black Friday openings also suggests that the front loading of holiday sales has reached a cost-benefit inflection point driven by the growing pressure of ecommerce, especially the convenience of free delivery. JL

Suzanne Kapner reports in the Wall Street Journal:

Eighty percent of the products and 43% of the prices promoted on the front pages of the 2015 and 2014 Black Friday circulars of Best Buy, Macy’s, Target, Wal-Mart, Kohl’s and J.C. Penney were identical. Marketing experts say the trend is likely to continue, particularly since retailers are under pressure to contain costs.
Shoppers who missed out on $97 Beats headphones, a $99 Nikon camera and other Black Friday deals last year needn’t worry. Chances are those same items will be on sale again this year—for the same price.
The front page of Target Corp.’s 2015 Black Friday circular was almost identical to the front page of its 2014 circular, displaying Beats headphones, a Nikon digital camera, DVDs and an Xbox gaming console. Only the gaming console changed price, dropping about $30 from one year to the next. In fact, every Target Black Friday circular since 2008 has featured a Razor scooter, with the price fluctuating between $17 and $22, according to Brad’s Deals, a website that tracks retail discounts.
For the past two years, Wal-Mart Stores Inc.’s Black Friday newspaper inserts have included a $49 Toshiba hard drive, a $19 Pyrex Bake-n-Store set and a $49.97 Brother sewing machine. The Black Friday circulars of Best Buy Co., Kohl’s Corp., J.C. Penney Co. and Macy’s Inc. also have contained many items and prices that didn’t vary much from year to year.
The retailers say they are simply catering to customer tastes. “Our Black Friday ads are intended to showcase the products our guests want,” said Joshua Thomas, a Target spokesman. “There are some products and categories like toys and small appliances that tend to be popular year over year.”
But some executives also point to a desire to mitigate risks at a time when defending their turf against online rivals is paramount.
“Merchandising executives often look back at history and say, if something was successful, we ought to repeat it if I want more certainty,” says Kohl’s Chief Executive Kevin Mansell. “That doesn’t necessarily translate to growth, though.” Playing it safe can turn off shoppers looking for a reason to brave the cold and crowds and make the early morning trek to stores on the day after Thanksgiving.
“It’s as if they aren’t putting any time or effort into the Black Friday circulars, and just expect people to come out and shop no matter what,” said Ashlee Jackson, a 24-year-old Piscataway, N.J., resident, who scours the newspaper inserts of Target, Wal-Mart and Best Buy before heading to stores on the Friday after Thanksgiving.
Black Friday remains one of the busiest shopping days of the year, but it recently lost its top ranking as more shoppers migrate to the web and spread their purchases throughout the month of November.
Even though it has been derided as a commercial spectacle marred by shopper stampedes, it remains a day when retailers are locked in a vicious fight for market share that they are loath to cede.
“Retailers regard Black Friday as a day when they have to protect their business,” said Michael Appel, the founder of a retail consulting firm. “They will go with the tried and true, as opposed to stepping out and trying to be innovative. It’s like replaying your greatest hits.”
Despite the rise of online shopping, print circulars are still one of the most effective ways to get shoppers into stores, industry executives say. That is particularly true on Black Friday, “when customers go back to shopping in a more traditional way,” said Tom Clarke, a managing director with the consulting firm AlixPartners.
Eighty percent of the products and 43% of the prices promoted on the front pages of the 2015 and 2014 Black Friday circulars of Best Buy, Macy’s, Target, Wal-Mart, Kohl’s and J.C. Penney were identical, according to price-tracking firm Market Track LLC.
Marketing experts say the trend is likely to continue, particularly since retailers are under pressure to contain costs. “The budgets for producing these circulars are under pressure, and that’s contributing to a lack of change,” said Larry Chiagouris, a marketing professor at Pace University’s Lubin School of Business in New York.
Macy’s has featured Rampage boots for $19.99 on the front page of its Black Friday circular for three years running. Also on the front page of its 2015, 2014 and 2013 circulars were $39.99 Charter Club women’s cashmere sweaters and $19.99 men’s Alfani and Club Room dress shirts or ties.
“We have customer favorites back by popular demand,” said a Macy’s spokeswoman, adding that the retailer also features a broad assortment of “new gifting ideas.”
Best Buy’s 2015 and 2014 circulars showcased a $779.99 11.6-inch MacBook Air, $224.99 Klipsch Reference dual 8-inch speakers and a $74.99 Amazon Fire TV.
“With hundreds of products and many factors that go into pricing, there may be times when products have the same price from year to year,” a Best Buy spokesman said.
For shoppers, the regularity has an upside. They can make a battle plan for this year’s Black Friday before the circulars are released. “You know there will be $10 sweaters at Kohl’s and $39 cashmere at Macy’s,” said Rebecca Lehmann, the manager of content marketing for Brad’s Deals. “It’s going to be the same in 2016.”

0 comments:

Post a Comment