Your Black Friday Bargain Is Stuck Somewhere in the Pacific

(Bloomberg Opinion) -- Don’t count on that Black Friday bargain.

This holiday season, stores won’t be competing on price — the battleground will be availability. With shoppers buoyant (for now), there’s little need to simulate demand, while supply shortages and higher shipping and labor costs will push retailers to protect margins. That all adds up to fewer doorbusters.

Already there’s evidence that deals won’t be so plentiful. Stacey Widlitz of SW Retail Advisors tracks 60 chains across the U.S. and Europe. At more than 90% of them, she says, promotions are down compared with 2020, when they were already being reined in. Data from IRI show not only fewer special offers across most major U.S. non-food categories than in 2019, but also shallower discounts.

There’s still time for TVs and bath towels to hit shelves before Thanksgiving. But in the U.S., availability in hot categories such as electronics and toys is already patchy. Toys are a flashpoint in Britain too, due to logjams at the busy port of Felixtowe.

Big retailers such as Walmart Inc. and Target Corp. are best positioned to weather the supply crisis, as they can place vast orders earlier than other stores and even charter their own shipping vessels. But smaller chains may struggle to secure enough stock. That doesn’t bode well for choice, or a frenzy of special offers.  

Even without clogged supply lines there’s another good reason for sellers to scale back Black Friday: to avoid a pile-up of online orders.

Although digital demand has fallen as malls and high streets have reopened, it is still running higher than before the pandemic. U.S. online retail sales are expected to be up almost 60% between now and Christmas eve, compared with 2019, according to Mastercard SpendingPulse. A surge in deal-hunting on laptops and mobiles would put enormous strain on warehouses and delivery networks, even before factoring in labor shortages. One way to cope is to offer more curbside pick-up; another is to diffuse demand over a longer period.

Fortunately for stores, it looks like consumers are already adapting. People are heeding chains’ advice to buy early to avoid disappointment. Some 51% of the Americans surveyed by the NPD Group plan to start their holiday shopping before Thanksgiving.

That may explain why we are seeing some tactical promotions now. In case you haven’t noticed, October has become the new November. If big retailers have already secured enough stock to sell at an eye-catchingly low price, why not steal a march on rivals, particularly if their deliveries are stuck in the Pacific?

Amazon.com Inc. kicked things off back in 2020, holding its Prime Day bargain bonanza in October. It shifted the shopping holiday back to June this year, but the online giant is still offering what it describes as “Black Friday worthy deals” ahead of November. These include almost a month of promotions on beauty products, to siphon away buyers who’d typically head to department stores for make-up and skincare gifts.

Target Corp. has also been holding early offer days. And on Sunday more than 30 retailers including Macy’s Inc. and Guess? Inc. took part in a new 10/10 shopping holiday. Perhaps as a taste of things to come, some participants had to pull out of the live-streamed event at the last moment because of a lack of inventory.

Getting ahead is a wise move, because there’s a real risk that consumer demand evaporates between now and Thanksgiving. In Britain, the prospect of higher food and fuel bills is already taking its toll on confidence. With inflation ratcheting up in the U.S. and stimulus benefits receding, we could see fragility among American shoppers, too.

But pulling back on Black Friday could offer another silver lining for retailers dealing with the current supply strains. If they can condition consumers to expect fewer deals in the future, the end result will be fatter margins. While some shoppers will hold out for bargains, many are already getting used to paying more for what they want. Companies should capitalize on this environment to reset their customers’ mindsets and their own earnings.

I’ve long argued that there’s little reason for the American-born shopping holiday to to exist in Europe — all it does is sap profits as products that would have been sold at full price get needlessly marked down. It’ll be much harder to dislodge across the Atlantic, where the event is embedded in U.S. consumer DNA.

Right now, groups such as Nike Inc. and Bed Bath & Beyond Inc. are suffering from the delays and shortages. But eventually everything from sneakers and lotions to dolls and dresses will be flowing through trade routes again. Being able to sell more of this stock at full price would be a lucky way for businesses to leave behind the great supply chain meltdown of 2021. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.

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