Long in a state of decline, 2020 provided the final nail in the coffin to kill off Black Friday as we have known it. While consumer shopping trends have changed in recent years, 2020 provided a catalyst for accelerated change in two key areas: technology and behavior. Some may say that the Covid-19 pandemic delivered that fatal blow, but it’s changes in retail technology and consumer shopping behavior – both of which are inextricably intertwined – that sealed Black Friday’s fate. The shopping holiday will never be the same, and both retailers and consumers should be grateful.
Shopper Behaviors Rapidly Matured
As nonessential stores were forced to close early in the year and retailers deemed essential had to impose strict capacity limits, no one will argue that the pandemic forced consumers to shop in different ways. These new constraints coupled with rising reports Covid-19 cases and regional lockdowns forced consumers to shop from home via their browser or retailer mobile apps. Overnight, ecommerce became retailers’ lifeline with growth rates seen as high as 45 percent. Ten years of ecommerce growth were seen in just a few months. Consumers purchased goods in product categories they never before shopped online. We only have to look at the grocery segment for proof.
Since consumers have been stuck at home, they’ve found new uses for their time rather than wandering store aisles — and they have little reason to abandon these newfound habits in the future.
As the year went on, consumers grew more and more accustomed to the convenience of goods arriving directly to their homes, including a newfound interest in same-day delivery services. The meteoric rise of services like Instacart and Shipt, not just for grocery, further entrenched consumers’ habits of shopping conveniently from home.
Then came the magic of curbside pickup. Retailers learned they could deploy new services like curbside in a matter of days instead of months. The convenience of curbside plus same-day delivery served to satisfy the instant gratification needs of shoppers. Retailers have shown massive growth in these services and have propelled some, such as Target, to new top-line revenue growth. The combination of curbside and same-day delivery also had a side benefit to the industry – reduced reliance on shipping carriers like UPS and FedEx who would soon experience the downside to rapid ecommerce growth with capacity constraints never before seen.
Black Friday Reboot
Which brings us to Black Friday. With the pandemic raging on, retailers knew they couldn’t drive foot traffic with doorbusters as in past years, and most opted to start their holiday sales much earlier while outright closing on Thanksgiving Day. Many followed Amazon Prime Day in mid-October as the launch point and have been running promotional offers ever since. In fact, Digital Commerce 360 reported that 76 percent of the top 50 online retailers offered Black Friday deals starting the Monday before Black Friday. Consumers rewarded retailers with the highest Black Friday ecommerce sales ever recorded according to Adobe’s analytics. Cyber Monday followed with a record breaking $10.8 billion in online sales. And this happened while in-store foot traffic was down over 50 percent on Black Friday! Consumers spoke loudly with their purchasing power and said, “no, thank you” to in-store shopping.
Convenience is king, and consumers made full use of curbside pickup, same-day delivery, and regular shipping methods for all those holiday purchases. Since consumers have been stuck at home, they’ve found new uses for their time rather than wandering store aisles — and they have little reason to abandon these newfound habits in the future knowing they don’t have to sacrifice their new buying habits.
Retail Technology Leads the Way
While consumers were busy building new shopping habits this year and realizing they didn’t need to visit a store on Black Friday, retailers have been busy deploying new technologies to enable a new generation of convenience services. The most important? Both curbside pickup and same-day delivery services require one key element – accurate store inventory data. For years, retailers have worked at improving their inventory accuracy relying on shelf counts, POS data, RFID, and more recently even computer vision technologies to improve this accuracy. In 2020, inventory accuracy has become the most critical driver of customer experience.
No customer wants to receive a mobile notification or email telling them one of the items they purchased for curbside pickup is now out of stock. Ordered groceries from your favorite supermarket? Dread getting that text message from your Instacart shopper that the store is out of avocados or ran out of your favorite cereal? There’s no faster way to ruin a customer’s experience than failing to deliver what they asked for.
What can a retailer do? Deploy a new-order management system that let’s you convert those lost sale items into a different fulfillment method. But wait, IT says they need six months to do that? Nonsense. Once a CEO learns IT can implement curbside pickup in days, a new standard for tech deployment can be set in stone. Speed matters, and that new order management and fulfillment system can be up and running in a couple of weeks at most.
Which brings us back, again, to Black Friday. With accurate inventory management in place, and new-order fulfillment capabilities optimized and deployed, consumers can shop on your website, add items to their baskets, and checkout in one simple process with some items delivered same-day, others ready for curbside pickup and those out-of-stock items shipped from a fulfillment center — all in one click. And all this without visiting the store (other than to pick up their curbside items).
That leaves one last temporary sticking point – shipping those ecommerce orders in time for the holidays. Early in the season, retailers were getting the message from carriers that “Shipageddon” was looming large. Despite their increase in logistics capacity and hiring surges, retailers needed to expect early cutoff dates and surge pricing. In normal years, retailers might shrug this off and encourage shoppers to come to the store. But in 2020, that’s not going to work. This meant shoppers were encouraged by retailers to plan ahead and shop early and use curbside pickup and delivery services. Shipping protocols reinforced convenience habits, feeding into basic consumer behavioral changes.
Some retailers (not named Amazon) also had to seek out additional third-party logistics providers to augment their ecommerce shipping capacity. This led to a rise in more 4PL providers to manage fulfillment for online retailers, which in turn fueled another technology surge that fed the convenience habits for consumers. Starting to see a trend here in how technology and shopping habits have been intertwined in 2020?
Operational Factors and the Win-Win for Retailers and Shoppers
There is an operational win for retailers because of new consumer behaviors and technology. By spreading out 2020 holiday promotions, retailers were able to adapt to supply chain shortcomings. Many retailers cut back their orders over the summer out of fear of rising inventory costs as sales had nose-dived during lockdowns earlier in the year. This meant the normal surge in buying in advance of Black Friday really never happened and the last thing retailers needed were more out-of-stocks pushing customers to another seller. By spreading those promotions out and not relying on doorbusters for Black Friday, retailers were able to better control their inventory across the holiday season. From an operational perspective, retailers should want to work this way every year. Why go back and force yourself into deeper discounts on Black Friday and suffer from out-of-stocks at the worst possible time in the season? Why drive more logistics nightmares and revenue surges when you can enjoy broader sales across the season?
A Different Holiday
Shoppers win on convenience. While they give up the sense of discovery from walking down a store aisle or spotting something on a merchandise rack from afar, they gain ultimate convenience and save time. The holidays are stressful enough for most people, so why not remove some of the shopping stress? You suddenly remember you need one more last-minute gift? Just tap on a retail app on your smartphone and order it in a few clicks. It’ll arrive on your doorstep or you’ll pick it up curbside. And you avoid those crowds which might even make you feel safer.
For consumers, Black Friday has been replaced with ultimate convenience. For retailers, they have gained better operational management of their business. The result? Happy customers. In 2020 the changes were forced out of necessity. Looking forward, imagine the outcome if you stop crowding your stores with aggressive shoppers on a single day, and instead maximize new shopping strategies. Black Friday as we know it is dead, and retailers and consumers alike will be celebrating for years to come.