Wednesday, November 27, 2013

New Black Friday Strategies

The day after Thanksgiving is arguably the most important sales day of the year to brick and mortar retailers. Even its nickname, Black Friday, signifies its importance: Black Friday is the day a store sells so much it moves out of the red (debt) and returns to the black (profit). Over the years the stakes for Black Friday have grown increasingly high. Not only have retailers had to fight with each other in early-morning, competitive price wars but also battle for the dollars of increasingly savvy customers and  fend of the looming threats from convenient online savings/shopping.

Historically, Black Friday retailers tended to go one of two ways:

  1. The OMG Approach: provide an unbelievable price on a high demand item but lack enough supply to meet all of the customers need (For example, Best Buys sold the Wii at a great Black Friday price when it was first introduced but only had enough products for the first people in line).
  2. Discount Blowout: provide significant, but not unbelievably amazing, discounts on many items throughout the store with supplies that will satisfy many of your customers (A common tactic of clothing retailers)

This year Walmart is taking on a new tactic. Walmart typically goes for the OMG/unbelievable price approach complete with extreme doorbuster deals, late-night lines wrapping around the store, and a Black Friday news story of a trampling incident or store brawl caused by a lack of supply of the high demand items. However, this year Walmart's sales strategists are trying something new.

In addition to greatly increasing their stock of hot ticket items (65% increase in TVs, doubling the number of tablets it held last Black Friday, etc.) [1], Walmart will guarantee the heavily discounted door buster prices to those customers in line by 6pm on Thanksgiving night. If the item happens to sell out before they can purchase it, these customer will receive a One Hour Guarantee Card that locks in the discounted price for them once the item is restocked.

Yet this strategy is not without criticism. The 6pm timeline will take shoppers away from their family dinners and thankful celebrations to the chaotic, sometimes hellish environment of Black Friday discount shopping. Some will argue that these creep ups of store openings infringe upon and take away from the real meaning for the holiday. Walmart's executives must ask themselves if this potential conservative backlash will threaten their consumer base to the point that the deep discounts and costs of additional store hours will make Black Friday sales less profitable.

[1] http://money.cnn.com/2013/11/12/pf/walmart-black-friday/

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