Issue #28: Can BFCM Save Retail?

Happy Thanksgiving! I hope everyone had a great time with family and friends enjoying delicious food and company. Maybe you even got in some retail Black Friday shopping too? Don’t worry, for those just curious about the trends, we will dive into all the headlines in this issue on Black Friday (BF) and preview what Cyber Monday will look like tomorrow.

Also, I wanted to plug a quick goal of mine for these next few weeks. My goal is to talk to as many subscribers as possible before the end of the year. I would love to chat about anything on your mind in the retail/commerce world as well as gather any feedback you have on the newsletter. If you are interested, please just answer “YES” in the poll below and I will reach out to schedule time.

Growing up (and still to this day) Thanksgiving is a major holiday in my family. All the extended family gets together, lots of food is consumed (shout out to the best part of Thanksgiving, stuffing!), and we have a great time. Unlike some other families, Black Friday was never a huge part of our Thanksgiving traditions. However, I do have core memories of driving by the mobbed King of Prussia Mall, right by my grandparents where we did Thanksgiving, and seeing the 2.9M square feet packed with excited shoppers. Coupled with videos and articles of shoppers queuing up for hours, sometimes even days, to get the best deals, the younger me always associated Black Friday with retail. However, as the years went on, and eCommerce’s prevalence grew in our society, Black Friday lacked that same zeitgeist. The digital experience just was not the same as the retail rush. I am sure there is some interesting psychology around purchasing that has changed with the shift to digital too. Still, despite the evolution, Black Friday represents a massive day for commerce. In this piece, I am going to dive into three headlines that stood out to me from Black Friday, but first a quick poll!

Headline 1: Consumers Spent $6.1B Online On Thanksgiving Day

According to Adobe Analytics, consumers spent $6.1B on Thursday, an increase of 8.8% year over year. I find this statistic to be fascinating for a couple of reasons. First, it is further evidence that illustrates people are not going in person to purchase their holiday gifts. Second, it could be a sign the economy is strengthening, and people are more willing to spend compared to last year. Finally, it could be the effect of Thanksgiving being so late this year, and now people are condensing their shopping to make up for lost time, even on Thanksgiving Day. Until the season holiday progresses, and we see further numbers, it will be hard to tell exactly why this surge in Thanksgiving day spending happened, but regardless it could be interpreted both positively and negatively for now.

My takeaway from this stat - it is further evidence that Black Friday is no longer just a day, it is a week plus!

Headline 2: Mastercard Says Black Friday B&M Sales Slightly Increase, eCommerce Sales Way Up

Mastercard data says sales at brick-and-mortar stores grew 0.7% year over year, but U.S. eCommerce sales increased by 14.6%. At first glance, the data shows that shoppers are really voting with their wallets that they prefer eCommerce. That is still true because of the convivence that shoppers get. However, to set the table, eCommerce is still a small part of purchases, with one data point having only around 25% of purchases being made online. That discrepancy means that the dollar growth should be looked at too and when it is, the growth is a lot closer than it seems when you look at the raw dollars. Consumers want to spend more online and in store.

My takeaway from this stat - consumers are showing that the way forward is omnichannel, they want both retail and eCommerce purchasing options.

Headline 3: Discounts Exceed Expectations According to Adobe

Consumers have shown that they are looking for deals in this environment and Black Friday’s deal-oriented nature was bound to play into that. Regardless of expectations, consumers still found, according to Adobe, that discounts exceeded expectations. Adobe also found toy, electronics, and apparel purchases were elevated due to those discounts. It is crucial during this time period brands find a way to deliver value to their customers and give them a reason to purchase with you rather than another brand. It is an opportunity to win a customer for life. Value is not the only thing customers respond to, but it is clear that they do respond to it.

My takeaway from this stat - you need to find a way to differentiate so you give the customer a reason to purchase your product rather than someone else’s.

As you can see, Black Friday was a big success. Up next? A Cyber Monday preview where I believe there will be another strong day.

Black Friday Success Indicates Strong Cyber Monday?

As written about in the prior section, eCommerce had a strong week during Black Friday. Customers are responding positively to the discounts and the extended time period of those discounts this year. Based on all this success, I am expecting Cyber Monday to be another strong sales day. However, I am concerned about shopping fatigue and whether customers have already purchased everything they want already. This potential fatigue is why it is so crucial to give customers a reason to come to your site on Cyber Monday. Maybe an additional deal or an exclusive product or offer, something to give them a reason to spend on Cyber Monday. I personally purchased everything I wanted to online already during Black Friday, and will not be participating in Cyber Monday, but I am curious about the rest of the audience.

The Downside of Outside Software Vendors

Blue Yonder is a software tool utilized by some of the largest retailers in the world for various supply chain-related tasks. It has been around since 1985 and does over $1B in annual revenue. Last week, it experienced a ransomware attack that severely impacted tools used by external companies relying on its software. If you saw stories of Starbucks employees having to handwrite their hours this week, instead of punching in, it is because Starbucks uses Blue Yonder for its scheduling and managing of hours. Starbucks has been able to operate with patchwork (paper) systems, but it is not what the company needed headed into its first holiday season with a new CEO trying to make waves. Some other notable companies affected by the attack were British supermarket chain Sainsbury’s and Morrisons, as well as pen manufacturer BIC. While outside vendors can help improve efficiencies, the risk is that they might not have the same standards for software integrity as you. Always be sure to vet your software providers to make sure they have sufficient security protocols in place. As of publishing, there has not been a timeline for when systems are going to be operational again.

Dick’s Reports Strong Q3 Earnings

Based on a strong back-to-school season and emphasis on retail, Dick’s Sporting Goods reported strong Q3 earnings. Recently, Dick’s has been doubling down on retail with the House of Sport and Dick's Field House concepts. These experiential-focused retail stores, with rock walls and more, mean that people spend more time in the store and come back more frequently. Additionally, employees at these locations are further empowered to engage with customers and upsell them through the experiences in the store. The plan is to continue to retrofit existing stores to be more experiential. It is super important as an established retailer that you constantly innovate and don’t rest on your laurels. That is how Sports Authority does not exist anymore and Dick’s is thriving. On top of the retrofits, sales improved 0.5% year over year through continuing to foster an omnichannel experience, the product mix, prioritizing good customer experience, and more. Another good example of how properly investing in retail can really boost the bottom line.

The Downside of eCommerce: Returns

As eCommerce continues to rise, there is a huge issue with returns. Customers have been trained that returns have no cost, so the expectation is that every purchase has that safety net. Part of this belief is due to the fundamental issue with current eCommerce, it is a lot harder than in retail to confirm this product is right for you, whether it is apparel or something else. Backed by the ability to return most things for no additional cost, this causes customers to over-order. When a return happens, reverse logistics are not that strong to get the product back, it is hard. Usually, it ends up getting sold at pennies on the dollar on a pallet to a return company that resells it (like Binstar from Issue #3) or even worse just thrown out completely. Retailers are starting to push back with fees and stricter policies, but the struggle is that a generous return policy is a big reason customers purchase online. This struggle is why I believe omnichannel retailers are best equipped to handle returns due to the eCommerce infrastructure and the retail store print to have people come to return the goods as well as the infrastructure to sell returned goods. As eCommerce continues to grow, this is a huge area that can make or break eCommerce as a profitable channel. What are some of your favorite ways retailers handle returns? Any innovative solutions?

• Summary: The Cumin Club started as a ready-to-eat Indian food startup producing pre-packaged, healthy, flavorful meals that can be microwaved or boiled to be eaten in 5 minutes. Recently, Cumin Club also launched a fast casual bowl concept, similar to Chipotle, where you can get an Indian bowl, wrap, or salad.

• My Take: Bowl places have been on the rise for years and one type of food that would do well in that concept would be Indian food. It is a very crowded market with Cava, Chipotle, Sweetgreen, etc., however, I still think there is room for additional concepts using different cuisines.

• Founder(s): Ragoth Bala, Kiru Rajagopal, and Harish Visweswaran

• Funding: $3.7M from Listen Ventures and M25 Ventures

• Number of Locations: 1 in Chicago

• Social Media Following: 20K on Instagram and 2K on TikTok

Additional Links:

1. How Dr. Squatch has evolved its retail packaging and presence over time (read more here)

   • My take: Notice how the packaging really stands out in the newer picture compared to the original picture

2. Canadian C-Store and Gas Station, Parkland, plans to add over 1,800 EV charging ports and revamp 100 stores (read more here)

3. Apollo Bagels is currently in a dispute with its landlord about the line outside its West Village location (read more here)

4. Jack in the Box will no longer have a COO and instead, the responsibility will be overseen by the CMO (read more here)

5. Q3 Earnings winners and losers from a restaurant POV (read more here)

6. Around one-third of consumers are going to order takeout or delivery for Thanksgiving (read more here)

7. J.C. Penny advertising on Amazon Prime Football with Martha Stewart has driven success (read more here)

   • My take: Make sure to watch the new documentary Martha on Netflix - great learning on branding, commerce and more from the original influencer/creator

8. Nordstrom had a strong Q3, but is still worried about the holidays and if they will have a strong performance (read more here)

9. Secondhand gifting is growing in popularity according to 74% of shoppers. (read more here)

10. Couche-Tard, the parent company of convenience store chain Circle K, is trying to compete with QSRs by expanding its food service capabilities (read more here)

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