Westword: First of all, who are you and why are you an expert on Black Friday?
Darrin Duber-Smith: Well, I'm married. So, I know a lot about shopping. (Laughs) I've been in marketing and management for over 25 years. I've worked in many different industries for over one hundred different companies. I've had a consulting firm for the last thirteen. I spent a lot of time in the '90s in the natural products industry dealing with retailers like Whole Foods and Wild Oats, helping to develop a new model for retail. As you notice, a lot of the other retailers have kind of followed suit, and they all look a lot more natural and green and organic, don't they?
I learned a lot watching the industry go from one billion to one hundred and fifteen billion in about fifteen years.
I spent a lot of time doing that, and it taught me a lot, because we had to kind of break rules, and make new rules for getting shelf space in some of these more mainstream stores. I've been teaching for ten years now, so, I think I've been talking about Black Friday for five or six.
Where did the term "Black Friday" come from?
It comes actually from the 1960s, I believe. It was used by the Philadelphia police to describe the day after Thanksgiving, and it wasn't a very nice term. It really described all of the crowds and the pushing and shoving that happened. So, the police department coined the term "Black Friday." Honestly, it didn't become the busiest shopping day of the year until 2005. So, a lot of mythology perpetuated, I guess, because perception is reality in the consumer world.
It is interesting to see how retailers have turned it into a positive term -- and mythology has followed that "Black Friday" was the day that pushed retailers into the "black," meaning positive earnings, versus the "red."
Yes, at some point someone spun it and said, "well, 'Black Friday' really means this is the day that retailers go into the 'black' and start making profit." I think that's the understanding of what it means, and we've kind of morphed into that. So it went from a negative to a positive, and I don't know who really is responsible for that.
What changed in 2005 in particular that shifted "Black Friday" into becoming such a big day?
It really wasn't a change. It's just in 2005, it actually then became the busiest shopping day (profit-wise.) For years, it was the Saturday before Christmas. It was kind of something fabricated by marketers, and it just took a really long time to gain momentum. I don't know why it accelerated in the last five or six years, but it certainly has. I guess it's a pop-culture thing.
So, it's competition between retailers, really.
Yep. When online (sales) came into the picture, the number of retailers -- I don't know if they doubled, but certainly there are more and more retailers than ever -- makes it hyper-competitive. The discounting is pretty crazy. With retailers like Target now opening at midnight on Black Friday, do you think this will really up sales?
Yes, it will bump sales. But stores are always robbing Peter to pay Paul. Because, if you're buying it one time, you're not buying it another time. There's planned cannibalization of sales there. You're urging someone, instead of coming out at 3 a.m., to come out at midnight. Now the question is, are you going to steal customers from other stores? The short answer is, yeah, the other stores aren't open.
How long is this going to last? In terms of years, not many. It's what I call "retail one-ups-manship." They just continue to try and one-up each other. And eventually the effect is diluted. Consumers get very used to it, it's not special anymore. The deals are running for weeks now.
And, I think the idea of online sales is really going to jump the shark, and the whole thing will peak and sales will start spreading out again. But I think online sales will rob a lot, don't you?
Well, yes. But I think there can be two distinct types of shoppers: Those who online shop, and those who shop in the store. Is there a lot of crossover with those shopping habits?
You see it a lot when the weather gets bad. People will forgo their brick-and-mortar purchases and shop online. There tends to be different kinds of shoppers, yes, but online sales do take a bigger chunk of retail sales every year. Which means they're stealing from brick-and-mortar sales. It's just not as fast as everyone thinks it is.
But you've got online sales going, and I think "Cyber-Monday" was just coined a couple years ago. It was in a press release, which means a PR person wrote it. So that one was planned. And then last year American Express came up with "Small Business Saturday."
"Small Business Saturday" is now being pushed really heavily.
Yeah, it's their whole gimmick -- the Black Card. American Express caters to small businesses, that's their whole target market. So its really in American Express's best interest. But consumers will get numb and desensitized to all of it. Frankly, since the recession, there have been so many deals all the time, that I think there is a huge expectation consumers are just going to get, you know, with Groupon and everything, 15 to 70 percent off. Honestly, most retailers can't survive with that sort of discount.
Retailers don't have heavy margins, anyway, for the most part. Their margins are a lot tighter than manufacturers. You've got raw material prices increasing, and it brings a lot of price pressure upward. Which means if retailers discount, they have to buy a heck of a lot more than they used to, get some volume deals so they can offer those point-of-purchase discounts. And it just kills.
That's the whole problem with the Groupon model, is that consumers don't want to pay the regular price.
It sort of negates the definition of a "sale price."
Right. The idea behind "sales promotion," the definition, is "a short-term offer of value designed to illicit a response." They have to be short-term. And the idea is that someone is going to respond. So, couponing two-for-one and all these types of sales promotions that we have, when you overuse them, consumers eventually become desensitized. And then they expect it. If it's not a deal, they won't buy it. That's just bad merchandizing, bad strategy.
You keep discounting to get rid of inventory and cash flow, and then you wonder where the profits are -- and then you wonder where the return on investment is. You're supposed to use it to entice new customers to try your product. And then it somehow turns into "hey, lets reward all our current customers because they want to be treated like new customers." It's like a drug. You use more and more of it. And I think a lot of these retailers are pretty cracked out now.
Its like, "do consumers really demand this? Are they really going to do less holiday shopping without all this stuff?" I don't think that anyone has proven that they will.
