Gray Thursday: Increased Sales, or Black Friday Suicide?

By Stephanie Taylor Christensen  NOV 21, 2012 9:24 AM

This year, many more big-box retailers are opening their doors just as shopper bellies are digesting their Thanksgiving dinners. But is the effort really worth the cost?

 


MINYANVILLE ORIGINAL Black Friday once kicked off the holiday spending season in America, despite the fact that it wasn’t actually the biggest shopping day in terms of retailer profitability until 2005. However, the trend has continued; a record 226 million shoppers visited stores and websites over the 2011 Thanksgiving weekend.

Last year also marked the arrival of new retailer trend aimed at holiday deal-seekers: Opening deals once-reserved for Black Friday, on the night of Thanksgiving. Now dubbed Gray Thursday, the strategy appears to have been a competitive edge for retailers like Toys R’ Us and Wal-Mart (NYSE:WMT), who opened at 9:00 p.m.  and 10:00 p.m., respectively, on Thanksgiving in 2011. Best Buy (NYSE:BBY), Target (NYSE:TGT), and Macy’s (NYSE:M) opened their doors at midnight to kick off Black Friday. More retailers have jumped on board with Gray Thursday this year, causing others to up the ante with even earlier opening times.

This year, Kmart (though technically open most of Thanksgiving day), will begin in-store “Thanksgiving night” pricing at 8:00 p.m, as will its partner company Sears (NASDAQ:SHLD), as well as Toys ‘R Us and Wal-Mart. Target will follow suit at 9:00 p.m. Though Best Buy will hold shoppers off until midnight, it will provide tickets for those in line up to two hours before the store opening for first access to deals.

Though the earliest-bird-gets-the-worm logic behind Gray Thursday should theoretically drive retailer sales for those who are open, a company’s bottom line is the sum of many parts, among them, brand image, accurate inventory planning, employee satisfaction, and the customer service and experience that ultimately determines loyalty and repeat business.

Though many smaller boutique-style stores, malls, and small businesses haven’t tossed the idea of Black Friday door-busting on its ear, Gray Thursday is shaping up to be the new norm for major big-box retailers competing for holiday market share. But, extending the holiday shopping season could present some gray areas for retailers. Here’s why.
 
The Cost of Disgruntled Employees

Though employees scheduled to work on a holiday such as Thanksgiving receive compensation for overtime and holiday hours based on labor laws, making Thanksgiving a typical workday in the retail world could amount to other costly employer headaches, specifically, if all levels of retail management are not abreast of the many legal loopholes the shift presents.

Keith Gutstein, labor and employment law expert at Kaufman Dolowich Voluck and Gonzo, says that beyond the issue of compensating hourly employees whose work week exceeds 40 hours due to shifts that begin on Thanksgiving and seep into Black Friday, some states have premium pay laws that require additional compensation for employees working in excess of a certain number of hours in a particular day—which may or may not meet the standard “40 hour a week” criteria.” Further, Gutstein says management must be aware of potential lawsuit vulnerability when creating Thanksgiving weekend work schedules, to ensure there are no  “disproportionately represented groups working the holiday, compared to the overall workforce,” which can lead to discrimination-based legal action.  

Retailers like Wal-Mart and Target have already received negative press in major media outlets thanks to angry hourly workers and their families. Supported by United Food and Commercial Workers (UFCW), some Wal-Mart team members are preparing to stage a Black Friday walkout protesting the Thanksgiving workday, and more than 347,000 incensed Target employees and their families have signed a petition at Change.org urging the retailer to put the Friday back into Black Friday promotions.  (See: Don't Look Now, but Wal-Mart Is Facing a New Lawsuit, Even as Black Friday Strike Threat Looms.) Though they’ve generated far less momentum, petitions against Thanksgiving day hours at retailers like Kohl’s (NYSE:KSS) and Best Buy have recently appeared at the site, too.
 
The Value of Urgency

But, given that about 28.7 million people did their Black Friday shopping on Thanksgiving Day last year, and that turnout represented a 6 million shopper increase over 2010, according to National Retail Federation (NRF) data, irritated employees may not be enough to sway retailers.

However, there is the matter of how removing the Black Friday shopping traditions of setting alarms, waiting in long lines, and fighting for parking spots in the wee hours of the morning will have on consumer interest and excitement for the holiday spending season. In fact, retail expert and Metropolitan State College Marketing Professor Darrin Duber-Smith predicts that Gray Thursday could ultimately be the demise of holiday shopping season momentum. “Letting a sales promotion extend into a several day time period dilutes the short term impact. The sense of urgency erodes among consumers and ‘the day’ loses its significance.”
 
Robert Passikoff, founder and president of Brand Keys, Inc. seconds that notion, saying that although retailers have attempted to manipulate the holiday shopping season, there has been little effect to bottom line—but much to consumer engagement and shopper trust. “Just because retailers began advertising and decorating stores for the holidays well before Halloween doesn’t mean consumers are shopping earlier,” says Passikoff. He points to Brand Key’s annual survey of intended holiday shopping behavior, conducted with 16,200 consumers. It revealed that 40% of those surveyed will begin shopping in November, while one-third plan to wait for the traditional Black Friday, and Cyber Monday sales. But, nearly the same proportion (36%) of customers interviewed said they’ll hold onto their dollars until December—in the hopes of scoring deeper discounts.
 
Whether Gray Thursday or Black Friday emerges as the sales leader for retailers this year, don’t hinge your investment decision-making into these two days alone. According to 2011 ComScore data, both key spending days still fall short to other key holiday spending days like Cyber Monday (November 26), Green Monday (December 10), and Free Shipping Day (December 17).

Twitter: @WellnessOnLess
No positions in stocks mentioned.

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