What Happened to Black Friday? Nathan Yang Explains
If you were disappointed with 2023 Black Friday deals, you are not alone. On social media, people scoffed at discounts they believed were not significant enough to be worthy of the annual day-after-Thanksgiving retail tradition. Some waxed nostalgic for the chaos of earlier decades, when people lined up hours before stores opened and scrambled for products. Others exposed – or invented – outright trickery: stores that either raised prices or kept them the same, while labeling them as a Black Friday Deal.
“It’s an entertaining meme, but the reality is that people vote with their wallets and their practice,” said Nathan Yang, assistant professor of marketing at the Cornell SC Johnson College of Business. The lack of deep discounts hasn’t stopped people from making purchases.
“A lot of people have noticed that Black Friday deals, at least in brick-and-mortar stores, are not what they used to be,” Yang said. The same is true for the Canadian post-Christmas Boxing Day deals.
The shift to online retail over the years means that stores no longer need to lure people in the physical space to make a sale. Purchases can happen at any time, so retailers spread seasonal sales across several days.
In the past, retailers used Black Friday sales as a tool for inventory management, Yang said. They needed to clear out the excess to make space for new products. They offered incredible deals – a $10 flat screen TV, for example, but only stocked a few. The point was to get people into the store to buy other, more expensive items.
The pandemic changed Black Friday, Yang said. Retailers suffered financially when supply chain issues affected product availability, so they responded by becoming more agile regarding inventory. This ensured that they avoided stocking too many or too few of any product. The effect today? Less excess inventory to try to offload during the holiday shopping season.
Covid also changed people’s expectations about use of space.
“Even if there’s less foot traffic in a particular retail store, people might actually end up spending more because they feel like they have space to shop around,” Yang said. “Covid made retailers very averse to creating situations of crowdedness, which is basically a negative customer experience factor.”
Retailers have also shifted to more personalized marketing strategies. Instead of general sales, companies now reward their loyal account-holding customers with early discounts not available to the general public.
Retailers are increasingly using sales data and algorithms to identify the customers likely to have the highest value to a company – a measurement known as “customer lifetime value,” or CLV. Using this metric, retailers optimize their marketing efforts towards high-value, returning customers. The biggest retailers have their own data science teams devoted to this type of analysis, while smaller retailers use off-the-shelf or custom-built software for this purpose.
In other words, personalized marketing is more sophisticated and profitable compared to conventional discounts and promotions.
There is a silver lining to having fewer of the old Black Friday gimmicks, Yang said. The scarcity mindset can make people feel physically aggressive. Online shopping leaves that experience behind.
“There’s a bit more civility now in the shopping environment, where retailers are not nudging people to go nuts over these sales,” he said. “And I don’t think it’s hurting them because they are still selling a lot of stuff.”