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The retail sector takes on its biggest stress test in an already all-too-stressful year this week as Black Friday kicks off the all-important Holidays season. This will, as the hideously overused cliche goes, be an ‘unprecedented’ occasion this year, with bricks-and-mortar stores operating under strict COVID-19 precautions and the wider shift to online potentially putting enormous pressure on the supply-chain.

While Black Friday has seen bargain hunting move increasingly online for a number of years, clearly the shadow of the pandemic is likely to fuel an even sharper uptick in 2020. That said, while it might be hoped that the annual scenes of fights breaking out in US stores as customers batter their way to the front of the line to secure a cut-price TV set would be absent this year, it’s unlikely that social distancing  measures will survive the venal temptations of 60%+ price reductions.

So what are retailers doing to prepare themselves to make the best of what should be the most wonderful time of the year? It’s going to be different, but people are still going to want retail therapy as part of their festivities, is the consensus view from a number of leading retailers. As Doug McMillion, CEO of Walmart, puts it:

There are some common trends – people are at home more, they’re eating at home more and they’ve all been through a difficult year. So just emotionally, in my family, while it would be a smaller group, we’re really looking forward to Thanksgiving and Christmas and New Year’s and some sense of joy and normalcy. And I think we’ll see that play out as it relates to consumption patterns in the US and beyond.

At Target, CEO Brian Cornell expresses similar seasonal sentiments:

While many things will be different this year, our guests have told us that they still want to celebrate the Holidays and we know they’ll be looking to Target for some holiday magic…We’ve spent a lot of time talking to guests throughout the year and as it pertains to the Holidays, they’re clearly telling us that they want to celebrate this Holidays season, but they know it’s going to be very different. [There will be] smaller gatherings [and] those trips that we used to take will be postponed, but we certainly expect that the guests that we serve are going to look for ways to find that a little bit of joy during the Holidays season.

He adds:

All indications as we’ve talked to the consumers and talked with the guests is they’re going to look to celebrate the Holidays season, they’re going to be focused on gifting and celebrating with their family and close friends and we expect them to be in our stores and shopping online right till the very end of the Holidays season…So, we expect this to be a season that’s going to be very different, unlike any other we’ve ever seen, but we expect that guests will decorate their home and there’ll be gifts under the tree and they’ll find special ways to celebrate the Holidays season.

Doing things differently

But there is going to be a need for retailers to behave differently, says Kohl’s CEO Michelle Gass:

Kohl’s has always been known as a holiday destination and this year will be no different, despite COVID altering all aspects of customer expectations…We’re ready to adapt as needed as the customer adapts…We’re still in a pandemic and there’s a lot of uncertainty ahead, but the customer response so far has been positive. We’re pleased with the early results. We made a lot of adjustments to adapt to what we knew was going to require changes, given the pandemic, really hitting all elements of the Holidays season from timing, product, value and experience. From a timing standpoint, we have put more emphasis on the early part of the season. We kicked off with great energy an early Black Friday campaign.

This ‘early response’ is a common action point from retailers this year. While it’s traditional to complain that Christmas seems to come earlier every year, this year it’s absolutely true. The emphasis is on trying to spread the load when it comes to demand generation, both offline and online, according to the thesis pitched by Macy’s CEO Jeff Gennette:

As a retailer, our responsibility is to elongate Holidays demand if we can. So in the month of October, you saw what [we] did to try and start that early. We did that by basically bringing up the Friends and Family events into the third week of October. You can see what we’re doing now with the Black Friday specials, kind of prying those off of the Black Friday event and bringing that earlier into the month of November.

We’re trying to see how the customer responds to it. So far, they’re biting and liking what we’re doing on that. We made the decision to close on Thanksgiving Day and we’re definitely expecting that we’re going to bring down the traffic in brick-and-mortar on Black Friday itself and getting that demand earlier. But also if the customer decides to shop in the last 10 days or during Cyber Monday or we’re going to be ready for that. So you can see what we’ve done with our events. If you look at our calendar, we’re just elongating the demand, as are our competitors.

Target has also taken similar actions on this front, confirms Cornell:

As we’ve looked at the Holidays season, we expected the guests to start shopping earlier, but continue to shop throughout the Holidays season right up to Christmas Eve. So, we think it’s going to be a prolonged shopping season. I think we’re going to see very different shopping patterns. We don’t expect to see those big spikes during Black Friday and all weekend. I think it’s going to be spread across the Holidays season and we think December is going to be a very important gifting season for our guests.

Rather than concentrating holiday deals around Thanksgiving and Black Friday, we’ve spread our Black Friday offers throughout the entire month of November, with weekly promotions spread across different categories throughout the month. And in the spirit of transparency and trust, we’ve assured our guests that if they see any of our Black Friday items for a lower price later in this season, we’ll happily make up the difference through our extended price match policy.

The in-store experience

In the UK and most of Europe, the notorious annual scenes of long lines outside stores and physical fighting over deals inside will not occur in the main thanks to national lockdowns closing down so-called non-essential retail. But in the US, bricks-and-mortar outlets will be open, meaning that retailers have had to focus on omni-channel priorities to maximise health and safety for customers and employees alike. Target’s Cornell explains:

To minimize lines, we’ve added more than 1,000 mobile checkout devices across the chain, allowing our team members to help guests check out anywhere in the store. We’ve also added thousands of gift items eligible for same-day fulfilment. And we’re entering the Holidays season with more than double the number of drive-up parking spaces compared with a year ago. In addition, we’ve added refrigerated and frozen items to our pick-up and drive-up assortment at more than 1,600 locations across the country, making this the first Holidays season in which guests from coast-to-coast can use these convenience services to pick up everything they need for a holiday meal.

The offline store network will continue to be important during the Holidays regardless of the accelerated shift to digital seen throughout 2020, attests Kohl’s Gass:

The COVID-19 pandemic has no doubt accelerated the shift towards digital, and we’ve seen this in our business. Digital sales represented 32% of our total sales this [past] quarter, increasing 25% [year-on-year]. Our stores supported much of this growth, fulfilling nearly 40% of the digital sales. Kohl’s is positioned to continue benefiting from this shift. We have an extremely healthy and flexible off-mall store base, a large and growing digital platform and compelling and differentiated omni-capabilities which reach our base of 65 million customers…You’ll see us amplify our pick-up options and really leverage the store footprint. We’re pleased with the customer adoption of Buy Online, Pick-up In Store and Curbside, which now represents a third of all the pick-ups that we’re seeing from customers.

The same sort of expanded fulfilment options are also in play at Macy’s and will help to deliver some semblance of normality for the Holidays, argues Gennette:

We’ve elongated events and put an increased emphasis on digital to even out the flow of traffic in our stores through the Holidays season to maintain health and safety for our customers and colleagues. Our stores are dressed for the Holidays and our digital platforms are ready to go. Our teams are 100% focused on executing holiday and we are confident in our plans. So, like all of 2020, we know unexpected challenges and opportunities will come our way and our team is prepared to tackle them.

My take

It’s been a long year for retail and, as noted above, the real test is about to come. Every year market research firms rush to be the first out the door with ‘Black Friday’ business and traffic breakdowns, but this year there will be genuine interest in seeing how the coming weekend shakes down in practice. Happy Holidays or Bah Humbug? Watch this space.