Tuesday, December 3, 2013

Where’s The Deal?

Amazon makes it easy. You don’t have to deal with under-aged, grumpy, sleep deprived sales zombies who have gotten into work at some ungodly hour to earn time-and-a-half just because it’s there. The retailers have fallen into a trap to compete against, or ride the wave of their competitors. Many smaller, mom and pop style businesses respected their employees and stayed closed on Thanksgiving. Two larger retailers that come to mind are electronics and appliance heavyweight PC Richards, who boisterously advertises the fact that they revere their employees and will be closed all day on Thanksgiving. Another employee-centric retailer that also remains closed on Thanksgiving but doesn’t advertise that fact is the storage and organization leader, The Container Store. Interestingly, The Container Stores does not offer any special Black Friday sales but is nevertheless packed with customers.

Department stores are struggling to survive more and more. Local and state governments are increasingly taxing brick and mortar businesses as well as their residents to finance their pandering mentality to special interests. Many times when a business or service company stumbles upon a great idea to stimulate their business, they look to capitalize on it even more. It doesn’t matter what they sell or the service they provide. They simply want to use that formula again and again. Once they begin doing that, they eventually kill the goose that laid their golden egg. It’s akin to telling the same joke over and over again; eventually people stop paying attention.

Unless you live in a cave, everyone knows this past Friday was the infamous Black Friday. It is reverently discussed in retailing circles and media as the Holy Grail of retail. Black Friday is the venerated indicator to most retailers that their impending holiday sales will provide, or not provide, a rewarding final quarter. It’s also the last chance for many retailers to wind up in the black after struggling through the economic doldrums we are presented with during every news report regarding the economy. But by all reports being proffered by the media, Black Friday sales were a bust!

Statistics show retail sales at brick and mortar stores were down 7% this year. 44% of shoppers made their purchases online. The brick and mortar businesses have been pushing online purchasing to compete against online retailers without a physical sales location. At the same time, we wonder if they might be shooting themselves in the foot? Several retailers offered in-store only specials to encourage shoppers to visit their brick and mortar location. Smart move. One store manager we spoke with at JCrew at the Shops At Nanuet, stated that they opened early, had good crowds but not much in the way of sales. The store was offering 30% off everything in the store. JCrew is a bit more of an upscale store, where discounts may not be as important to their customer as it might to a Walmart consumer.

In perusing the sale circulars in the Thursday edition of the Journal News, which was infinitely beefier than the newspaper itself, the sales for Black Friday seemed to be the usual faire for weekend circulars. There was nothing unique with the pricing, there were no tiered discounts based on time of arrival or any real reason to shop in their particular store. In the early days of Black Friday, the ads were about the same as they are now.

One of the differences between then and now, was the surprise savings you might receive by visiting a particular store at an early hour. Unadvertised and exceptional savings were your reward for visiting early. There were also tiered discounts that lessened as the clock ticked forward. So, if you shopped between 4 and 5AM, you might receive 75% off of certain items; 5 and 6AM might see 50% off and so on. Times got pushed from a one or two hour early opening to 3 and 4AM starts, staying open later – then around the clock! Once the idea caught on, retailers were quick to duplicate the fruits of this creativity and success. As time passed, the retailers changed personnel, marketing personnel and so on with younger, “book smart” employees arrogantly clutching their MBAs. These companies discarded the retailing pros of yesterday. These young executives collectively believed, as they usually do, that they know better and know more and will run these stores better and more profitably than those before them. You have to love youth. Maybe they needed to pay more attention at their Junior Achievement meetings, and maybe someone should inform them that they were just wrong.

Another misstep that has helped to choke the goose from laying another golden egg is the decision to open on Thanksgiving Day. ABG has previously written about being open on holidays, but it bears repeating. We believe as our government run school system applies political correctness to every aspect of these young student’s lives, and our public schools water down the importance of our remembrances and celebrations for our history, they diminish the importance of them. As such, it transcends toward everything else we do. Our Memorial Day parades are less about remembering those who sacrificed for us and our way of life, but about shopping, a day off from work, going to a barbecue or the beach or all of these. This cultivated learning can and should be just as easily turned around. But will it and how much longer will it continue?

Black Friday for all intents and purposes was trumped this year by itself and exacerbated by Gray Thursday and Cyber Monday as well as weekly sales by retailers struggling to get by. Earlier Black Fridays had been successful because most of us had the day off on Thursday to cool our “spending jets” and get together with family and friends. Most us had a big, albeit traditional, meal with the entire family getting together. Now, however, that’s gone and we may never get it back unless more businesses such as PC Richards and The Container Store fight back and stand up for their employees, who in reality are you and I. Or, we can just wait to see what our young marketing geniuses come up with at their next Junior Achievement meeting.

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