Three Questions With an Arcadia Professor: School of Global Business’ Y. Rosie Madison on Black Friday Retail Trends

Black Friday is quickly approaching. But many consumers already started finding deals at various retailers months ago. What does this mean for the traditional holiday shopping season as we know it?

We asked Y. Rosie Madison, an adjunct professor in the School of Global Business, for her thoughts.

How have consumer behaviors around Black Friday changed over the past decade? What factors are driving those changes?
Black Friday was often anticipated by consumers and retailers for different reasons. Previously for consumers, Black Friday was the signal to shop for holiday gifts at reduced prices. For retailers, it represented the opportunity to realize, to make profit. Hence the label of "black Friday".

However, consumer behaviors around Black Friday have undergone several changes over the past decade. One significant behavior change is their expectation that Black Friday, as previously mentioned, is the start of reduced prices for holiday gift buying. This is no longer the case. Consumers have grown accustomed to having the prices of an array of products-clothing, appliances, electronics, and toys-reduced 60-70 days before Black Friday. With these "early" price reductions, consumers are spending their monies earlier. This early spending activity impacts the realization of achieving profit by the retailers.

A second behavior change is their "wait and see" buying process. Consumers, with their continual expectations of prices coming down, sometimes hold off on their purchases. This action forces retailers to devise additional sales promotions, which encourage consumer spending.

What challenges do small and mid-sized retailers face in competing with major brands during Black Friday? How can small/mid-size companies differentiate themself during this time?
With consumers squarely focused on getting "the best" or "the lowest" deals, there are two major challenges for small and mid-sized retailers during this timeframe. The first is being able to match the pricing levels that major brands might be offering to consumers. The margin level, the ability to make profit, for these retailers is smaller than that of the large retailers. So offering a matching or significant price reduction as a means to get consumer attention can delay or eliminate the company's opportunity to make profit. The second challenge is having a diversified array of products in their inventory to offer consumers. The number and type of offerings a small or mid-sized company has is dependent on what they can obtain from manufacturers. As you might anticipate in the allocation and shipping of products, the larger retailers are most likely in the front of the line and will receive those highly anticipated and consumer requested products sooner.

To differentiate themselves and minimize a disparity of offerings, small and mid-sized retailers could offer similar but distinctive products. These products could come from smaller manufacturers and entrepreneurs, and the messaging could emphasize the "distinctive" as being synonymous with special. Additionally, these retailers could promote or lean into the idea of buying locally or supporting smaller enterprises. These activities and messaging could center around building or reinforcing existing buying relationships.

How do Black Friday promotions impact long-term brand perception and customer loyalty?
Promotional activities are generally done with two goals in mind: One, introducing/reinforcing your product in the consumer's mind and two, getting the consumer to buy your product versus the competitor's.

The goal of most Black Friday promotions is the latter, getting consumers to buy NOW. I believe this focus on pricing will have minimal impact on long-term brand perception notwithstanding any major quality defect or product performance issues. If a consumer is purchasing a brand for the first time and their experience is a positive one with both performance and pricing, then they may entertain future purchases, which could translate into customer loyalty. But across product and service markets today, the competition for a consumer's attention and wallet is constant and often fierce. So Black Friday's "shining attraction" of price will dim after the New Year and retailers will pivot to another, possibly different approach for our attention and wallet.