If you are in the retail business, “Black Friday” used to be a pretty special day. Traditionally the day after Thanksgiving was when hordes of shoppers flooded brick-and-mortar stores to start their holiday shopping. But this year, early Black Friday sales seemed to start in late October, and once we hit November, they became commonplace. Some of it seems to be driven by inventory overstocks. If that is what’s going to fuel these special sales, could we be looking at Black Friday continuing into February?
Two decades ago, when my product development and manufacturing team made and sold consumer products at retail,Black Friday was a big deal. I remember visiting Chinese factories in July or August and saw them cranking out millions of Black Friday specials: A million TVs for Walmart, or a half million DVD players for another big box chain. (I know, that was, in fact, a long time ago).
The buyers negotiated special deals in January or February, and Chinese factories ramped up production in the summer, so that all of the products could be packed onto container ships for the voyage across the Pacific. Then they would get sent to distribution centers, and they had to be delivered at precise times in early to mid-November so that they would be positioned in stores for the big event.
Thanksgiving Day was traditionally quiet and reserved for things more important than shopping, but come 6 a.m. on Friday morning, the doors would open at most stores. Popular places, like Walmart, would have to put on extra security details to keep people in line and maintain some semblance of order, because the deals were really that good. If you had any hope of getting what you wanted, you had to be ready in the first tranche to storm the aisles and run in and grab those special items, many of which were produced especially for this moment.
My U.S. sales team usually joined a running conference call starting at 5:45 a.m. Eastern Time as team members from all over the country stood in parking lots and reported on traffic at different stores, as we sought to monitor how our sales were doing. Those million TV sets? They would sell out in the first four hours. How about our products? Approximately 2 percent of the entire domestic market share for the year in our category would change hands in those four frenzied hours of Friday morning shopping. What I found particularly amusing was seeing people push laden shopping carts out of stores, only to discover they couldn’t fit everything in their cars. Usually, one could find a pile of discarded boxes over by the side of the parking lot, often with forgotten remote controls and instruction manuals still intact.
My CFO always asked me what kind of year we were going to have, and I always responded, “I’ll tell you the Monday morning after Black Friday.” And I always could. It was invigorating, it was scary, and it was strangely addicting.
Of course, when a formula works, people try to extend it. Just as Cyber Monday successfully extended Black Friday momentum to internet sales, early Black Friday access sales expanded to a week before, and now basically cover all of the month of November. It’s a great marketing technique, just like Amazon Prime Day or Alibaba’s Singles Day in China (now that’s truly great marketing) — get consumers to buy more stuff that they don’t really need, but the deals or so good.
This year I have been predicting great Black Friday sales on notebook computers and consumer electronics, driven by excess inventory. These historically have always been popular categories, but this year there’s a big inventory overhang thanks to pandemic-induced supply chain snafus. Let’s turn back the clock a year and a half. In April 2021, management consulting firm Gartner reported that worldwide personal computer (PC) ships grew the most on record. Chromebooks grew by triple digits back then, and the top six PC vendors all saw sales growth in the double digits. But it was never realistic to think demand would maintain that pace. People don’t replace computers every year, the replacement cycle is more like 3-to-5 years depending on who’s paying (work versus Mom and Dad). Sure enough, the pace didn’t keep up, but manufactures kept manufacturing, and now there is way too much inventory in the sales channel. Retailers in lots of other categories have this problem as well.
I recently saw Chromebooks on sale for $79. In the old days, you couldn’t buy a new laptop battery for that, let alone the whole computer. I imagine warehouses somewhere stuffed with Chromebooks, other PCs, Peloton machines, furniture, along with apparel and housewares. Maybe these goods were once packed in those hundreds of thousands of containers stuck off the coast of California, which I have always said eventually would hit the beach. I imagine a lot of that now freed merchandise is making good fodder for Black Friday sales. But judging by the amounts that need to be sold, retailers are probably not going to move it out it in four hours. Probably not in all of November — and maybe not even before next February.
Willy C. Shih is the Robert and Jane Cizik professor of management practice at the Harvard Business School. His research focuses on global manufacturing and supply chains. He previously spent 28 years in industry at IBM, Digital Equipment, Silicon Graphics, Eastman Kodak and Thomson SA. Follow him on Twitter: @WillyShih_atHBS