Last month REI announced all 143 stores would be closed on Thanksgiving and Black Friday, REI will urge Black Friday shoppers to go outside instead. “We think that Black Friday has gotten out of hand,” said Jerry Stritzke, CEO of the chain that specializes in outdoor and fitness gear. Perhaps Stritzke can disrupt the holiday shopping season, but I doubt it. More likely REI’s posture is an effective price-communication strategy. He is really saying, “We are skipping the discount frenzy,” and he is counting on customer loyalty and low price sensitivity to maintain profitability.
For as long as I can remember (and that is too many years), Thanksgiving weekend has been the start of the holiday shopping season. Many companies have given their employees Thursday and Friday as paid holidays. Retailers, restaurants, consumer services, and public services were generally open. Those who were not required to work often found the Friday after Thanksgiving a good day to begin shopping for Christmas or whatever holiday they celebrated. Retailers responded to the increased volume of shoppers by offering discounts to compete for the traffic; and of course shoppers liked the discounts.
As discounts became the standard, retailers began to up the ante by offering exceptionally large discounts on select items for a limited period of time early in the day, aka door busters. The point of the door busters is to capture a larger share of wallet. Get customers into the store early to buy the deeply discounted items, and sell them other products with more moderate discounts. As customers responded to the door busters, stores became crowded at opening time. Some customers then responded by camping at the doors, well ahead of opening time. Retailers reacted by opening their stores earlier and earlier. First 6 am, then 5 am, then midnight. Then as online sales took off, many retailers decided to compete by opening on Thanksgiving. All of these steps have been in response to high consumer demand, and each successive step has trained customers to look for ever larger discounts.
In the case of REI, they were never a huge discounter. They compete by focusing on high-quality products at premium prices. Clearly there are segments of the population that buy outdoor gear at large sporting goods companies, department stores, and low-price stores like Walmart. However while REI’s customers would appreciate discounts, they have generally been very loyal and willing to pay more for better quality. REI has wisely protected the premium prices and margins on these customers by not chasing the more price-sensitive customers with discounts.
By publicly announcing their Black Friday closure, REI is reiterating to its customers that it will not be joining the discounting frenzy. They are also getting positive publicity from people posting the Optoutside message on social media. Ironically many of the posts I saw were from people who have shopped on Black Friday in recent years. I suspect many of REI’s employees will also shop on Black Friday now that they have the day off. They will have time to shop for a few hours and get some outside activity. And even if those posting about REI on social media avoid going to any stores on Black Friday, many of them are likely to shop online. REI will be happy to take their orders online too.
So will REI’s move become a trend? I doubt it. Pay attention to what people do, not what they say on social media. Customers will still have free time on Friday following Thanksgiving, and they will most likely still want to get started on their holiday shopping. Retailers have to compete for that business, and they have trained those customers to look for discounts. For the retailers trying to sell to price-sensitive customers, grabbing those customers early and capturing a larger share of their wallet is their best bet. Until their customers are as brand-loyal as the REI shoppers, leaving those customers to shop online or wait until the weekend would be very costly.
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