A few years ago, we lived in a simpler time when you had to camp out in a parking lot with a parka, hand warmers and a thermos—and risk life and limb at the hands of crazed bargain-hunters—to truly earn your post-Thanksgiving bargains in-store. Now, these deals are rolling out earlier and earlier—in some cases, more than three weeks prior—and online to boot. This year, Target unveiled its Black Friday offers on Nov. 1, followed by Walmart on Nov. 8 and Amazon on Nov. 15.
While the elimination of the parking lot campout and the risk of getting trampled to death arguably enhances the customer experience, it’s not entirely clear why retailers are trumpeting their deals closer and closer to Halloween other than that it has become a game of one-upmanship. Sure, earlier deals generate more sales overall, but they hurt margins, and most consumers wait for Cyber Monday anyway. So why do retailers do it? The answer, in part, is because everybody else is.
The steady Black Friday creep
Per Ana Smith, senior director of media relations at the National Retail Federation (NRF), retailers first offered early Cyber Week deals in 2015. Since then, they’ve started as early as Nov. 1. This, she explained, gives retailers an opportunity to engage with consumers multiple times throughout the holiday season. But Smith noted despite “some pretty solid pre-Black Friday deals,” the best discounts come later in Cyber Week, as well as during the weekend before Christmas.
That’s perhaps why Kevin Fu, public relations manager at Adobe, said earlier holiday deals are effective at driving growth, but most consumers will wait “especially as the Cyber Monday brand has great staying power, and people continue to look to this day for the best deals.”
Indeed, an Adobe survey found 44 percent of consumers prefer to do their holiday shopping on the marquis dates that week.
Adobe forecasts Cyber Monday 2018 will be the largest online shopping day in U.S. history with $7.8 billion in sales. And, as of 10 a.m. EST, it was on track to hit that number with $531 million so far. What’s more, Adobe expects the three-hour period between 7 and 10 p.m. PST will bring in as much revenue as an average day during the rest of the year.
“These data points show that shoppers are focusing a lot of their spend on Cyber Monday, while many are waiting until the final hours—before the day’s deals end—to empty their carts,” he said.
The benefits—and drawbacks—of early deals
In terms of overall sales margins, retailers will still benefit from dragging the deals out as online sales from Nov. 1 to Nov. 19 reached $28 billion, up more than 16 percent year over year, Fu said.
“We attribute the fast growth to Veteran’s Day and pre-Black Friday deals kicking the season into gear,” he added.
Smith said early deals are especially effective for retailers who have offered early Black Friday deals for a number of years. “We have to remember, the holiday season captures between 19 to 25 percent of all total retail sales for the year,” she said. “Therefore, these two months can make or break a retailer, and it is crucial for them to be able to sell everything in their stores to have a successful year.”
Sucharita Kodali, vp and principal analyst serving ebusiness and channel strategy professionals at research firm Forrester, agreed, saying more sale days generate more overall purchases. However, she pointed out, early Cyber Week sales are typically just Black Friday deals available a day prior. When deals are different, she said there is some incrementality for retailers, but consumers know Black Friday and Cyber Monday are the big days and will often wait. (Although they did shop more on Thanksgiving this year.)
“These early sales do pull up some spending and can help to smooth out demand so you don’t have to ship everything in December, but those early sales are usually smaller,” she said.
And while early sales hurt margins because savvy shoppers are looking for discounts, Kodali said retailers are usually more concerned with gross sales. “That draws some people into the web early and actually hurts store sales, but retailers haven’t figured out how to avoid that because if they just have store offers that Friday, someone else—one of their competitors—will likely win sales on Thursday,” she added.
Kodali estimates 50 percent of Cyber Week sales occur on Cyber Monday, which is down from 60 to 70 percent of the week’s sales when there weren’t as many earlier deals. “As a percent of the overall holiday, though, [Cyber Monday] is disproportionately high, but not nearly as important for the season as, say, Singles Day is for China,” she said.
Robert Hetu, research director with research firm Gartner’s Retail Industry Services team, said he still feels the same as he did in 2016, when he wrote Black Friday needs to be reincarnated. “I think there is opportunity for a different approach by retailers, but [there’s] too much fear of the unknown, or at least fear of missing out, on their part,” Hetu said. “[C]onsumers are excited by the really deep discounts, but are aware that now everything is a good deal or the best possible deal. The broadening of the timeframe lessens the impact and excitement and diffuses the value of each promotion.”
Instead, he suggested retailers consider using data, analytics and algorithms to identify personalized holiday promotions that include bundles of services and products, as well as giving customers the ability to select “one or two crazy-good offers” based on their annual spend—and even delivering those purchases after they’ve finished Thanksgiving dinner.