Black Friday predictions: longer hours, bigger promotions, e-commerce gains

Are retailers staring down a future with a blackout of Black Friday? Some analysts and retailers are starting to seriously ponder this question. While the historically huge shopping day isn't what it used to be, it isn't obsolete either. Quite the opposite: Black Friday will soon be known as an entire week of retailers putting forth their best promotions as online and mobile shopping gain in popularity.

Forty-one percent of consumers still plan to head to stores on Black Friday, according to the International Council of Shopping Centers. Eighteen percent of consumers plan to shop in a physical store on Thanksgiving, while 32 percent of consumers will hit the stores on the following Saturday and/or Sunday.

Black Friday is expected to show modest sales increases from the same period in 2013. According to BDO, retailers should see a 2.4 percent increase in sales, largely due to the increase in deal-driven shopping days. And 64 percent of retailers are offering more promotions this year than last holiday season.

But the days of the one-day shopping frenzy are gone. Retailers are starting their holiday sales earlier and keeping the deals running longer. Some, such as Walmart (NYSE:WMT), Amazon (NASDAQ:AMZN) and Office Depot (NASDAQ:ODP), launched promotions as early as the weekend after Halloween. And Target (NYSE:TGT) and Walmart both introduced the "new" Black Friday, with specials running an entire week. A number of retailers will have already offered the majority of their holiday promotions by the time consumers sit down to Thanksgiving dinner.

"While Black Friday is still a highly important selling day for retailers, it's no longer the cornerstone of the holiday shopping season due to a phenomenon we refer to as 'holiday creep,'" said Clay Olivier, CEO at Volusion. "This notion revolves around the idea that retailers are extending their Black Friday deals throughout Thanksgiving week and in some cases up to two weeks in advance."

"By 2020, the official start to the holiday season may be in October," said Ted Vaughan, partner in the retail and consumer products practice at BDO USA. "Consumers now expect holiday promotions to come early and end late, and it's becoming increasingly challenging for retailers to provide attractive deals while preserving margins. Pulling out all the stops—from free shipping, to extended store hours, to deep discounting—often hurts bottom lines, but is necessary in order to survive in today's hyper competitive environment."

As Black Friday's start time inches up, retailers need to compete more for in-store foot traffic before the big day. BDO found that 67 percent of retailers say that they are using exclusive in-store deals and discounts including doorbusters, promotions and limited-time products. In addition, 17 percent of the CMOs surveyed said they will also focus on in-store events as a top tactic for Black Friday traffic.

But price cuts and deals are not enough. Retailers need to deliver a customer experience that keeps consumers loyal and coming back, even when they are relying on inexperienced, seasonal staff.

"Delivering a personalized customer experience and anticipating consumer needs is nearly impossible in that situation," said Gary Ambrosino, president and CEO, TimeTrade. "In fact, 74 percent of consumers surveyed by TimeTrade said they'd be more likely to consider purchasing additional items or higher priced items when assisted by a retail associate."

Black Friday will, as always, remain the "Superbowl" of shopping for the year, predicts Michael Brown, a partner in the retail practice of A.T. Kearney consulting. "No matter how much pre-game we put in it, and even if some holiday shopping is siphoned off earlier, Black Friday will never change," he said. "It's not just that we get the best prices, it's part of our holiday routine, the way we kick off the holiday. It's not just great sales, it's everything happening at every retailer–shopping on a grand scale." 

However, small and large retailers alike recognize the increasing importance of a strong omnichannel strategy with consistent pricing. Therefore, 36 percent of retailers say their promotional strategy will focus on e-commerce as well as in-store and 19 percent of the CMOs surveyed by BDO said that most of their promotions will be focused online, up from 13 percent in 2013.

"Omnichannel is the heart of modern customers' loyalty. With the variety of purchasing options (online, showrooming, store locators, smart phone apps), customer loyalty is as elusive as ever. Consumers want options when it comes to how they shop, and retailers need to be able to provide them with a consistent experience across all channels," said Paul Martyn, VP of supply strategy at BravoSolution. "If people are flocking to the stores and draining inventory there, the options to order online with free shipping or pickup in a nearby store will help capture sales that may have otherwise been lost," he added.

But big boxes will rule Black Friday, according to Brad Wilson, CEO of Brad's Deals, especially with the policy changes this year that include aggressive price matching. For example, Walmart recently announced that they would price match with 30 major retailers, adding fuel to the fire of pricing wars.

"The sideline story to watch is how the largest physical retailers are running price matching plays and if they can beat the pricing algorithms at Amazon. It should be the most exciting holiday season yet," said Wilson. "E-commerce will jump the gun and try and break through the noise a little bit."

In the end, retailers will be looking to win over or keep customer loyalty by providing services and pricing that consumers expect, losing profits as they do so to gain trust in the long run. "In reality, most of the best deals will be on Thursday," Wilson added

Of course, digital will play a big role in the early shopping rush.

"Based on annual growth in online commerce, the early shopping activity Akamai is tracking, and holiday sales predictions from groups like comScore and Shop.org, we expect to see an increase in average and peak page views per minute this Black Friday," said M.J. Johnson, director of product marketing at Akamai Technologies. "The only question is how much of a jump we'll see year-over-year, and if it will be even bigger than last year's year-over-year."

Mobile will also see its increase in shares this Black Friday.

"As we all know, Black Friday will be a major day for retail sales this year, especially via mobile devices," said Mollie Spilman, chief revenue officer at Criteo. "There will be an increase in the number of new unique users to individual websites, as well as the number of websites each will visit. The brands that will convert the most traffic into sales are the ones that know which consumers have visited their mobile sites prior to Black Friday and then reengage them on the 'big day.' The competition [for] mobile sales is extremely tough and brands can expect to see a drastic increase in their mobile vs. in-store sales this year."

Michele Dupre, VP of retail and hospitality at Verizon Enterprise Solutions, agrees that wireless will play an important role in this year's Black Friday sales.

"Mobile will be a huge component in terms of the way in which retailers engage with consumers," she said.

While foot traffic for Black Friday weekend is predicted to be flat or decline up to 2 percent from last year, sales will be up 2 percent to 3 percent, according to RetailNext's Chitra Balasubramanian, head of business analytics.

This increase in retail sales can be attributed to several sources: First, an increase in store openings on Thanksgiving Day. And second, an increased conversion rate. "We expect this trend to continue into Thanksgiving at an even stronger level due to the great investment of time shoppers extend when making it into the crowded shopping environments," said Balasubramanian "If store operations are orchestrated well, customers will not want to leave empty handed. Those who go are looking to buy, not simply browse."

While the length of promotions and the size of promotions are already fixed at this point, there are still many variables to consider—everything from weather to omnichannel seamlessness. With that said, most analysts are predicting strong sales overall and record breaking deals in e-commerce.

"Consumers continue to shift their dollars from physical to online stores on Black Friday for convenience reasons, fostering a very ripe environment for the biggest Black Friday yet." said Olivier. "Lower oil prices are translating into more money in consumers' pockets to spend and in some cases reduced operating expenses for retailers, which may setup a bigger than expected increase for holiday sales and profits."

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