Retail

Black Friday may have undergone a 'fundamental change' due to the coronavirus pandemic


The coronavirus pandemic caused retailers to shift their approach to the holiday shopping season, opening the promotional window for Black Friday deals much earlier than years past. And some in the retail industry believe the adaptions may become standard practice going forward.

“We’re seeing a fundamental change in the promotional calendar,” Steve Sadove, former chairman and CEO of Saks, said Friday on CNBC’s “Squawk Box.” “I think the retailers have done a brilliant job extending the season, and that will play out as we go into next year,” he added.

In an environment where the pandemic has led more and more consumers to online channels, the earlier start to the holiday should prove beneficial in avoiding significant shipping delays for orders that are placed after the first couple weeks of December, Sadove also said.

The idea of lengthening Black Friday is not new for retailers, according to former Walmart U.S. President and CEO Bill Simon. “They’ve been trying to do that for years and haven’t had any success, and this might just be the year they pull it off,” Simon said in a “Squawk Box” interview alongside Sadove.

For big-box retailers, particularly his former company, Walmart, and Target, Simon said the willingness to embrace an extended Black Friday period likely depends on their ability to succeed in e-commerce while relying less on their physical stores.

“They’re moving from a channel of dominance to a channel where they’re a distant second” behind Amazon, Simon said. “They’re going to have to catch up very quickly, or they’re going to try to change the calendar back to be more physical and more Black Friday because they’re not going to like the result.”

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Sadove, who led Saks from 2007 to 2013, said he believes it will be “a combination of both” in the years ahead. One reason for that, he said, is the strong sales that have been experienced so far this fall.

“I think everyone is benefiting from the early burst. You saw this big volume increase year on year and it’s continuing and I think that’s going to lead to bigger numbers for the holiday season,” he said. “I think the retailers are going to try and play it both ways, where they continue the early promotions. And then with a big burst coming in at the Black Friday-Cyber Monday period.”

Whatever the path forward for Black Friday deals, Simon said he has concerns about the sustainability of them being heavily targeted toward e-commerce, because retailers need people to buy products that aren’t just on sale. Online shoppers may just be cherry-picking deals, he said.

“If you just sell the deals, you’re going to lose money. It’s just not set up that way. You’ve got to sell the wrapping paper and the Christmas lights and the candy canes and everything else that goes with it or you’re just not going to make it,” said Simon, who oversaw Walmart U.S. from 2010 to 2014.

Sadove said that challenge could be mitigated by online purchases being picked up at physical retail locations. “That’s where you do get some of the margin enhancement,” he said. “Online shopping, especially with low-end price points, is very difficult. When you get the buy-online, pickup-in-store — and the big boxes have done it well — that really does win.”

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Follow CNBC’s updates on Black Friday here.



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