Black Friday could have seen a “elementary change” as a result of coronavirus pandemic
The coronavirus pandemic caused retailers to shift their approach to the holiday shopping season and open the advertising window for Black Friday deals much earlier than in previous years. And some in retail believe the adjustments may become standard practice in the future.
“We’re seeing a fundamental change in the advertising calendar,” said Steve Sadove, former chairman and CEO of Saks, on CNBC’s “Squawk Box” Friday. “I think the retailers have done a great job this season and that will be felt next year,” he added.
In an environment where the pandemic has drawn more and more consumers to online channels, starting the vacation earlier should prove beneficial in avoiding significant shipping delays for orders placed after the first few weeks of December, Sadove also said.
According to Bill Simon, former US President and CEO of Walmart, the idea of extending Black Friday is not new to retailers. “They’ve tried to do this for years and haven’t succeeded, and this could be the year they do it,” Simon said in a “Squawk Box” interview alongside Sadove.
For big box retailers, especially his former company Walmart and Target, Simon said willingness to tackle an extended Black Friday period likely depends on their ability to thrive in e-commerce while they are out rely less on their physical business.
“They are moving from a channel of dominance to a channel where they are a distant second,” said Simon behind Amazon. “They will have to catch up very quickly, or they will try to change the calendar again to be more physical and blacker because they don’t like the result.”
Sadove, who ran Saks from 2007 to 2013, believes it will be “a combination of both” in the years to come. One reason for this is the strong sales that have been achieved so far this autumn.
“I think everyone is benefiting from the early outbreak. You have seen this large volume increase year on year and continue and I think this will lead to bigger numbers for the holiday season,” he said. “I think the retailers will try to play it both ways where they pick up the early promotions. And then with a big breakout in the Black Friday through Cyber Monday period.”
Whatever the route for Black Friday deals, Simon said he has concerns that sustainability is heavily geared towards e-commerce as retailers need people to buy products that are not just for sale. Online shoppers might just be cherry picking stores, he said.
“If you’re just selling the deals, you’re going to lose money. It’s just not set up that way. You have to have the wrapping paper and the Christmas lights and the candy canes and everything else that goes with that, or you sell we just won’t make it,” said Simon, who oversaw Walmart US from 2010 to 2014.
Sadove said that making online purchases in physical retail stores could alleviate the challenge. “This is where you get some of the margin improvement,” he said. “Shopping online, especially at cheap prices, is very difficult. When you shop online, pick up in store – and the big boxes did well – it really wins.”
Follow CNBC’s updates on Black Friday Here.