Has Black Friday peaked in Canada? Why this year’s deals may spur more hype than revenue for retailers
Patrick T. Fallon/BloombergTarget has doubled or tripled the inventory of key Black Friday door crasher items compared with last year, John Butcher, senior vice-president of Target Canada, said.
TORONTO – Within just a couple of years, Black Friday has become so ubiquitous in Canada that it’s experiencing the same extended marketing phenomenon that has seen Boxing Day morph into Boxing Week: Call it Black Friday creep.
Walmart Canada, Indigo Books, Hudson’s Bay and Sears Canada have been running pre-sales this week before the Friday event, and Canadian Tire is staging a special ‘Red Thursday’ promotion, promising its “lowest prices of the year” over four days.
But industry forecasts predicting consumer restraint this holiday season may render this year’s ever-lengthening sale bonanza a fairly weightless marketing ploy, one that generates a lot of hype but limited incremental revenue.
In 2013, just 27% of Canadians bought goods on Black Friday, according to DIG360 Consulting, which tracks customer purchasing behaviour after the annual marketing event as opposed to consumers’ intentions before the sale day. That compared with widely circulated predictions of 50% of 60% of Canadians partaking in the event in 2013.
“I don’t think 2014 is going to be a big advance over last year,” said David Gray, principal at the Vancouver-based agency. “Sales moved so fast from almost zero in Canada in 2010, I think we are already starting to see a bit of a peak. The industry and media pundits have created a focal point around this, and it has created heightened expectations among shoppers.”
But the expectations of great deals often exceed the value of the deals themselves, Mr. Gray said, because retailers are not ready to offer too many items at a deep discount this early in the season. “You will see a few key items at a decent discount and some door-crashers, but there will not be much breadth to it.”
The industry and media pundits have created a focal point around this, and it has created heightened expectations among shoppers
While Canadian retailers were ostensibly forced four years ago into mimicking the U.S. shopping event under the threat of cross-border shopping, only 2% of Canadians actually made a trip across the border last year on the day after U.S. Thanksgiving, DIG360 found, a figure consistent with prior years. That is expected to hold firm or decline this year given the lower Canadian dollar.
It comes amid predictions for a tepid holiday sales period this year.
Canadian holiday retail sales are expected to grow 3.3% this year compared to Christmas 2013 season, according to a forecast from Ernst & Young, fairly weak in light of inflation and 2013’s rise of just 2.8%, when Eastern Canada was pounded with a severe ice storm that resulted in several lost shopping days.
Deloitte’s estimate is even more conservative, predicting a rise of 2% to 2.5% for holiday 2014. That raises the competitive stakes among retailers such as Walmart and Target, which is weighing its future Canadian business strategy on its holiday performance.
AP Photo/Charlie Riedel, Filehopping for items on sale also makes people feel less guilty about spending in the first place — in essence, a sale gives them permission to shop.
“We know our competitors are going to come out swinging,” John Butcher, senior vice-president of Target Canada, said this month. Target will be far more aggressive on its holiday prices relative to competitors than last year, he said, extending its price match guarantee throughout the period and doubling the print runs of its toy and holiday catalogues this year, to six million from three million. Target has also doubled or tripled the inventory of key Black Friday door crasher items compared with last year, he said.
While some in the industry have debated whether Black Friday may eventually wipe out Boxing Week, research firm NPD Canada predicts Boxing Week 2104 will still be the bigger event of the two this holiday shopping season, with more than two-thirds of consumers planning to shop.
Laurence Ashworth, associate professor of marketing at Queen’s School of Business, said consumers love sales and that an increased number of them may lead to slightly higher shopping overall. Consumers believe that they have achieved a small victory when they purchase a good at a discount. Shopping for items on sale also makes people feel less guilty about spending in the first place — in essence, a sale gives them permission to shop.
“Commentators talk about it as though it is a zero-sum game [between Black Friday and Boxing Day], but there is a possibility that it could increase the size of the pie,” he said.
“Certainly, when you lower prices, you increase demand and there is a larger sales volume.”
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