Black Friday Is Less Important As The Role Of Physical Stores Evolves

The early shopper data from Black Friday, the day after Thanksgiving, indicate that fewer shoppers went to stores on Black Friday this year than last year. The decline is a sign of how the purpose and functionality of stores has changed.

According to retail analytics company RetailNext, which monitors foot traffic in tens of thousands of stores, the decline was 3.2% on Black Friday. (On Saturday, also an important retail date historically, in-store traffic was down by 0.8%.)

What’s Happening to Black Friday

The decline in the number of consumers entering stores on Black Friday and the Saturday after doesn’t mean the holiday season will be weak. The National Retail Federation forecasts that the holiday season will be 2.5% to 3.5% higher than in 2023. And because of inflation, sales numbers even in the stores that had fewer visitors are likely to increase.

So why is Black Friday foot traffic down? The most obvious reason is the growth in online shopping. But that’s not the whole story. Black Friday itself has changed and so has in-store shopping.

In the last several holiday seasons, consumer tastes changed dramatically. That left retailers with too much inventory of products consumers find undesirable and not enough of what consumers want.

The stockouts have driven consumers to start shopping earlier. Joe Shasteen, Global Head of Advanced Analytics at RetailNext said, “This extended shopping period has ultimately decreased the singular importance of Black Friday.”

In addition, there are other retail shopping events that are competing with Black Friday. Amazon has a Prime Day in the summer and has added a second Prime Day in the fall as well. Chinese retailers created a shopping day called Singles Day on November 11th and that has been picked up by a number of U.S. retailers too. Frugal shoppers, alert to these events and anxious about the economy, are now reserving some of their shopping resources to those days instead of Black Friday.

How Stores Have Changed

The other important change has been in the role of stores themselves.

It used to be appropriate to measure the success of a store by how much revenue is generated inside the store. But now consumers shop on their mobile devices, including when they’re standing in a store. Or they’re reminded of a brand because they pass a store every day but don’t go in. It causes some consumers to shop a brand on their mobile even if they never go into the store. Those sales don’t get recorded as occuring in-store.

A store’s effectiveness is no longer just about the number of people coming in or the revenue at the register.

The cost of capturing a new customer online has skyrocketed. If a store is profitable and it also functions as a marketing device for customers who don’t come in, it’s an enormous value to brands and retailers. Stores are important marketing devices and they drive meaningful non-store revenue.

How To Know If A Store Is Working

Measuring store effectiveness is complex because every store is different. A store in Manhattan with great foot traffic has a different impact on non-store sales than a store in a strip mall in Houston. And different stores can fulfill different functions like accepting returns and holding events that are very important for non-store revenue in certain markets.

Every store now needs its own metric to measure performance. To make it harder still, effectiveness is impacted by the type of products being sold; a fashion store is different than a health and beauty store. There isn’t one formula.

All of these changes in shopping events, store functionality, inventory stockouts and consumer behavior have brought us to a season where Black Friday foot traffic is down while the National Retail Federation thinks overall holiday sales will be up.

It means that Black Friday is less important than it used to be. It also means that Black Friday store performance may not be predictive for the full year’s performance.

And it comes down a question that retailers never had to ask before: what is a store for? It is part of a permanent change in how consumers shop, not just on Black Friday but throughout the year.