Ready or Not? Black Friday Online Shopping Frenzy

Shoppers will still get up at 4 a.m. the day after Thanksgiving to grab doorbuster deals, but the lines will be a little shorter, shoppers a little less frenzied, and fewer people will be disappointed. According to a RetailMeNot survey, consumer spending over Black Friday will increase by 47 percent over last year. But the big winners aren’t necessarily going to be the brick-and-mortar big box stores — online sales from pure-play ecommerce, as well as traditional retailers with strong online channels, will be the ones reaping the rewards over the long shopping weekend.

Last year, online sales on Black Friday reached an all-time record of $3.34 billion, up 21.6 year-over-year, according to Adobe Digital Insights, and this year’s online sales are likely to exceed last year’s record. Brick-and-mortar took a dive last year, with Macy’s a big loser when its website suffered a Black Friday disruption, and in-store traffic not taking up the slack.

For those traditional retailers to nail a win this year, they will have to pay close attention to their online channels. Bed Bath & Beyond for example, has made a critical mistake by almost completely ignoring the online channel, even while Amazon ramps up its own home goods offerings, and Wal-Mart became a competitor with their acquisition of Jet.com, and pure-play online home goods competitors like Wayfair offer free shipping and eat Bed Bath & Beyond’s lunch.

Pure-play online retail giants like Amazon will repeat their astounding success of the previous year, and newer, born-in-the-cloud specialty retailers like In Season Jewelry are likely to muscle in on some of Amazon’s success. While Amazon focuses on being all things to all people, those smaller, niche online retailers are excelling in their particular niche areas.

Retail giants often approach the online channel as an add-on to their main focus of brick and mortar, and they do so at their own peril. As is the case in almost any business, there is a status quo and resistance to change. Ric Noreen, managing partner at Waypoint Strategic Solutions, sees two reasons why retailers stubbornly cling to that status quo. One is “the weight of historical precedent and practices in a brick and mortar environment. Management of the traditional retail firm has come up through the stores, has had lots of operational roles, has been in procurement, maybe worked in the supply chain, dabbled in merchandising and marketing, but their comfort zone is what they know. It’s what they’ve been good at, not necessarily what they’ll need to be good at going forward.”

The second explanation for the status quo is the large investment that established retailers have already made in real estate. “They are leveraged to the hilt, and still working to get the proper ROI on that bricks and mortar,” said Noreen. “And like a factory you know is outdated, you know it is not creating the throughput it should, but the alternative of tearing it down and building a new factory is beyond your financial capabilities. So you work hard at maximizing the output from those four walls, instead of what you should be doing, which is tearing those four walls down and starting again.” That resistance, the sticking to the status quo, is what is causing established retailers to falter — and also what is giving a competitive edge to online startups which, although they may be much smaller than their brick and mortar competitors, are in a position to take some significant market share.

Last year’s holiday shopping surprise performance of online versus brick and mortar shocked the retail community, which still expects long lines at the door, and looks to their flagship real estate as the center of their strategies. This year’s Black Friday weekend will bring even more surprises, and may well be a harbinger of the greatest shift in retail the world has ever seen.

image credit: technofaq.org

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Dan Blacharski is senior contributing analyst at Compass Intelligence, a market acceleration research and consulting firm; and the founder and senior PR counsel at Ugly Dog Media, a thought leadership, and public relations consultancy. Follow @Dan_Blacharski