The spectacle of 5 a.m. "doorbuster" sales and Thanksgiving night retail madness was already under assault from the rise of eCommerce. In 2020, the scourge of the coronavirus pandemic has put the final nail in the coffin of the bargain Bacchanal, as retailers strategize to avoid overcrowded physical stores and ease existing supply chain disruptions in this most unusual and chaotic year. Black Friday was already in terminal condition, but mercifully shall meet its demise during this most unusual year.
The term "Black Friday" hearkens back to Philadelphia in the mid-1950s, when masses of shoppers from the suburbs descended on the City of Brotherly Love on the Friday after Thanksgiving in anticipation of the annual Saturday Army-Navy game. Police tasked with maintaining order dubbed the day Black Friday, an unfortunate term that stuck despite merchants' efforts to rebrand the day "Big Friday".
By the late 1980s, retailers nationwide had begun to promote special sales on the Friday holiday as the kickoff to the Christmas shopping season. In 2003, several large retailers began opening at 5 or 6 a.m., by which time Black Friday had become the single largest shopping day of the year in dollar sales. In 2011, Walmart took the next logical step and opened on Thanksgiving night, a move quickly followed by competitors.
But the rise of online shopping began to bite sharply into in-person sales around 2014, and by 2018 the weekend crush of humanity into big boxes was clearly losing its appeal. Then along came COVID-19, the great accelerator.
In case you hadn't noticed, what used to be Black Friday began this week and will continue pretty much every day through the holidays. Amazon's annual Prime Day sale, typically staged in July as a back-to-school promotion, was moved to October 11-12 this year in an effort to ease pressure on stressed supply chains already overburdened with the quarantine economy. In addition, the mix of sale promotions will likely focus more heavily on essential items, entertainment, and work-from-home equipment. Retail analyst eMarketer forecasts a 43% increase over last year's Prime Day event, or roughly $10 billion for the 2 days.
Other retailers have launched defensive strikes. Several announced kickoff sales over the past weekend and outlined their strategy to stretch the former Black Friday extravaganza through Christmas. Target for example is promoting "Black Friday pricing all November" and pledges to match any sale price from a competitor during November and December. Other big retailers are following suit. Meanwhile, most of the big box stores have announced they will remain closed on Thanksgiving Day, and many have moved their Friday opening hours back to a more civilized 8 a.m.
Clearly, 2020 has been extraordinarily difficult for many retail operations. At least a dozen major large chains have filed for bankruptcy, and over 5,000 stores have closed permanently so far this year. For the first time, the National Retail Federation has delayed issuing its closely followed holiday forecast, noting that "many of the pieces" of the retail puzzle are still missing. Half of the 22 million jobs lost due to the coronavirus recession have not returned, and the prospect for additional government stimulus is uncertain. In general, retail spending has recovered surprisingly well, but the mix of products and services has shifted significantly, as have purchase and delivery channels.
The pandemic has hastened many changes already underway, but few more profoundly than how we shop. Once long ago, a quaint publication called the "Yellow Pages" (ask your parents) used as its jingle, "Let your fingers do the walking". What goes around comes around. This year, stay home on Thanksgiving, put your feet up, and raise a glass to the memory of Black Friday.
Christopher A. Hopkins, CFA, is a vice president and portfolio manager for Barnett & Co. in Chattanooga