[vc_row row_height_percent=”0″ overlay_alpha=”50″ gutter_size=”3″ shift_y=”0″][vc_column][vc_column_text]Those who have followed this blog for some time have heard my rant before; I hate Black Friday. It demonstrates desperation on the part of retailers, and destruction in enterprise value.

At a time when consumer demand is highest, let’s all slash our prices, force our employees to come to work at midnight, and pay them overtime. That just makes perfect sense.

Some stores decided to remain closed on Thanksgiving, including Home Depot, IKEA, Nordstrom and Neiman Marcus. Kmart opened at 6 a.m. on Thanksgiving, and remained open until 10 p.m. on Black Friday. What does that tell you? Way to honor your employees.

Not all retailers are embracing the trend. Ben Steele, Senior Vice President and Chief Creative Officer at REI, explained that “It felt to us like Black Friday had come to symbolize the worst of that trend and it was an opportunity to take a stand against it.”

Seizing the opportunity to create a counterculture, REI went further, closing on Black Friday and creating a “Blue Friday” campaign recommending that its employees and customers spend Friday in nature instead. See the video at Opt Outside.

Adam Smith famously coined the phrase “supply and demand” in The Wealth of Nations in 1776, and the term has been used for more than two thousand years. As capitalists, we are trained to charge for our services when they are needed most, yet we often don’t. When B2B customers have rushed and changed orders, suppliers are hesitant to charge a premium at the exact moment they should.

I get it; the environment is competitive, and retailers feel forced to race to the bottom in an omni-channel world. In fact, Cyber Monday will soon surpass Black Friday in transactions, demonstrating a fundamental shift in shopping behavior.

Being competitive doesn’t mean you have to be dumb. The average value of purchases per year is trending at about +3% during the holiday season- the same as it was before Black Friday became… red. The average discount on Thanksgiving Day is 24%. Sears (including Kmart) maintains a 22% gross profit. It seems discounters want to live by the sword and die by the sword.

I think this is where the phrase “giving away the farm” comes from. Participating in Black Friday is a choice. So is devaluing and giving things away when customers need you most.

 


[i] Why REI and Modcloth Will Close on Black Friday, and Prosper- Cara Salpini, Retail Dive[/vc_column_text][/vc_column][/vc_row]