Today is the biggest day for retailers in the US. Yes, if it is even possible for a country that has made shopping a past time, a competitive sport, and an anti-depression strategy, this day tops them all. It marks open season for deals -- is it the day we go from targets to hunters?
I've seen somewhere that Kohl's was opening its doors at 4:00AM local time, 1:00AM for its online doors. I'm sure they spent millions to let you know about it. No sense in opening the doors early if nobody knows about it and shows up. I wasn't curious enough to get up that early and interview folks standing in line by our nearest Kohl's. Did anyone do it? Were there lines when the doors opened? That would be just... incredible. I mean, how badly do you want something from the new line by Vera Wang?
It's not the item per se that is at issue here. Don't get me wrong, people are looking for specific deals and sales. As Bloomberg.com documents, shopping on this specific day is about the quest. In fact, Michael Moriarty, partner at A.T. Kearney Inc., predicts correctly why retailers' Thanksgiving offers won't avert web sales slowdown -- people still like going into stores. And in doing that, they trade time for quest.
Black Friday -- the day after Thanksgiving when retailers' ledgers are said to turn profitable, or in the black -- is among the biggest shopping days of the year and has traditionally marked the start of the holiday shopping season.
The busiest day for online shopping won't come until more than two weeks later, on Dec. 10, according to MasterCard Inc.'s Holiday Shopping Insights Report.
That Monday, almost three-quarters of U.S. retailers have online promotions planned to lure shoppers returning to work. That's twice the online promotions as two years ago, according to the National Retail Federation in Washington.
Online is a lot cheaper for retailers -- there's no need to have people open the doors to the store. All transactions can be automated. Yet many retailers with brick and mortar operations are using the clicks to drive people to the stores -- providing information on items and deals so that when you walk in, you know what you want. They are trading time for money.
When do you satisfy the hunters and make money at the same time? Harry Joiner at Marketing Headhunter has a terrific post on how retail loss exceeds online channel. In it, he builds upon a Harvard Business Review article on loss prevention (paid download). What I liked most about the article is that it highlights how saving money is a function of culture and process, not technology. Harry's conclusion:
Shrink management ain't about better technology. It's about vigilance. Clearly, that starts with hiring and managing A-players at all levels.
Which means money and time in the quest for the best talent and fit. As we sort out the new TQM we will need to decide what trade offs we're willing to make. I've already done all my Christmas shopping -- my strategy is to purchase the right items whenever I see them year around. In some cases, that means that I do not look at price, because quest for the right item matters more. This is how I cut down on crowded malls and long lines. What about you? Do you have a shopping strategy? What is your TQM ratio?
[November consumer sentiment, WSJ]
Hi Valeria,
Black Friday is an event that retailers both love and hate. Here in Richmond, there were people camped out overnight at Best Buy and Circuit City even though the same deals could be had on-line. Clearly, a demonstration that for these shoppers, it's about the quest. On the flipside, the items that they are going after are often sold at a loss to get people in the door. Those customers who camp out to get the deals are rarely the same customers who show up on a company's "best customer" (i.e. most profitable) list. At my previous company, they were sometimes referred to as "bottom feeders".
Regarding shrink, it is indeed a big problem for retailers. The four sources are employee theft, shoplifting, vendor theft and paperwork errors with employee theft accounting for almost half! The advice to hire A-players sounds great, but in a marketplace where margins have become razor thin thanks to the Wal-mart Effect, retailers have addressed margin erosion by reducing labor costs and that typically won't lead to hiring A-players. Sadly, the approach taken by many retailers to address the problem is to lock up hi-risk products to make them less accessible which leads to a diminished customer experience.
Posted by: Doug Meacham | November 23, 2007 at 02:44 PM
Yes, the loss leaders. What if as you hint at here, we rewarded the best (as in most profitable) customers instead?
I imagine you would have a lot of experience having been involved with retail operations in your line of work. Everyone has addressed growth with cost cutting in many industries, not only retail. It's a short sighted way.
Posted by: Valeria Maltoni | November 23, 2007 at 07:00 PM