Following the Herd on Black Friday
Black Friday, which is the day after Thanksgiving, traditionally marks the beginning of the American holiday shopping season and is historically one of the busiest shopping days of the year. In the past, retailers often opened at 6:00 AM on Friday. Led by retail giants like Walmart, Target, Macy’s, Kohl’s, and Best Buy, these opening times were later drastically pushed back to midnight in 2011. By 2014, retailers were opening as early as 6:00 PM on Thanksgiving Day. In other words, this “Thanksgiving creep” trend has caused Black Friday opening hours to “creep” onto Thanksgiving Day. Facing increasing competition from online retail giant Amazon, retailers have extended holiday deals across longer hours to “get whatever piece they can of the slow growing retail pie.”
However, the long-held notion that Black Friday is the best time of the year for sales is typically wrong. Analysis of the Black Friday frenzy reveals that retailers exploit the effects of information cascades in order to attract consumers, overloading them with information about seasonal deals. In fact, many of these deals are comparable to those offered throughout the year during holidays such as Labor Day, Memorial Day, Fourth of July, and President’s Day.
Retailers are able to manipulate the psychology of shoppers in making ‘rational’ choices that are actually not so rational. The foundation for an information cascade is laid weeks prior to Black Friday with promotional pamphlets filled with Early Bird deals, sales, and coupons, but it can also be traced back to the annual tradition aspect of the shopping holiday. Given this constant exposure to deals, shoppers are under the impression that they are “winning at the cost of the retailer.” This mindset is perpetuated by the long lines outside stores prior to opening and also by long checkout lines. Moreover, shoppers are constantly influencing each other’s behavior and decisions even before entering the store. Seeing long lines outside of a specific store may influence onlookers to also join the line. Though the onlookers may not have originally planned on stopping by this particular store, they may infer that those choosing to wait in line have better information about store deals. In that case, it would be a rational decision to join the line, regardless of the onlooker’s own private information or true decision. Similarly, observing shoppers grabbing for certain items that are selling out quickly may also invoke the desire to join in and abandon previous plans. The large crowds on Black Friday prompt onlookers to make decisions that they deem rational. However, shoppers’ feeling of confidence that they are rationally seeking out the best deals is actually a source of vulnerability that retailers count on.
As Black Friday continues to falter in this digital age, retailers are relying less and less on in-store sales and redirecting their focus toward expanding their online presence. Going forward, it will be interesting to see how these retailers will further integrate the retail space into the digital world, and whether or not the role of information cascades will also expand as consumer behaviors change.
Sources:
http://fortune.com/2015/10/29/macys-thanksgiving/
http://www.businessinsider.com/how-retailers-manipulate-shoppers-black-friday-2015-11