Black Friday to Cyber Monday: How low can the extreme shopping go?

Black Friday to Cyber Monday: How low can the extreme shopping go?
Tags: Consumer Behavior, Marketing
November 29, 2011

Just about every news story this Monday morning contained statistics relating to the health—or lack thereof—of the economy based on how much we shopped over the weekend. Terms like "Black Friday" and "Cyber Monday" have entered the general lexicon, with seemingly every retailer holding some sort of Black Friday sales event.

This is extreme shopping—whether it is at its zenith or nadir is up for discussion. Stories of shoppers using pepper spray to hold off the crowds vying for the last Xbox, and stores opening at 4 p.m. Thanksgiving Day are providing lots of grist for the doomsday set who see this as part of the fall of our culture. On the other side are the arguments that a good holiday season will set the tone for 2012 and our overall economic health.

While Thanksgiving has been the traditional start of the holiday shopping season—made official when FDR moved it from the last Thursday in November to the fourth (purportedly at the urging of Macy's Fred Lazarus) to allow for more shopping time—we've seen retail Christmas displays up as early as the Tuesday after Labor Day for many years.

The television classic "A Charlie Brown Christmas" debuted in 1965 and even then lamented the commercialization of Christmas, with Snoopy setting the tone with his contest-winning doghouse display and Lucy complaining that she never gets what she really wants: real estate. Today we look back at that time as the "good old days" before we knew what Black Friday was, and Cyber Monday had yet to be invented.

It should come as no surprise that as a society we are enticed by loss leaders and bait and switch tactics—these are time-honored traditions in retail. The twist is that now they are legitimized by the media and the accompanying advertising hype. What used to be somewhat sneaky practices are today held out for all to see, in the name of driving traffic.

Whether all this is necessary for growth or is just another paving stone in the road to Perdition depends on whom one asks. But given our embrace of daily deals sites like Groupon and Living Social, extreme values are expected; paying full retail is for losers. The question is how long (and low) can it go?

For retailers, this is a question with long-term ramifications. Price is the easiest tactic to copy, and the one with the least holding power over the long term. Service is no longer an expectation for shoppers with many retailers, which is good because it's disappeared along with margins.

The next five years or so in retail will be interesting to say the least. Brand loyalty for both products and retailers is at an all-time low, with few exceptions (notably Apple). At some point the price wars will reach bottom, and then we'll see who is left standing. My guess is that it won't be the low price leaders. It's going to be a bumpy ride, so hang on.