O'Keefe in the News

Thanksgiving Day store closings aren’t really about you

Thanksgiving Day store closings aren’t really about you

October 21, 2016

As published by George Jones, Fox Carolina

A growing list of retail chains has promised to “just say no” to opening on Thanksgiving, but allowing their employers and customers to enjoy family time may not be the biggest reason.

Retail experts say stores aren’t taking in much more revenue by pushing up the start of the biggest shopping weekend of the year.

For one, people’s spending hasn’t changed. They’re essentially spreading the same amount of money out over a longer period. A glimpse at the list of stores closing shows places buyers aren’t likely to rush to anyway.

“Stores have figured out that same-store sales for the last six weeks of the year between Thanksgiving and New Year’s Day have not increased because they’ve been open one more day,” said Mike Deighan, managing director of financial consulting firm O’Keefe. “A good example is somebody like a furniture store, or a mattress store, or office supplies. Why would people go to those stores on Thanksgiving Day? What value do they think they’re going to get shopping on a holiday that they’re not going to get some time in the next five to six weeks?”

HHGregg is a notable exception to this rule, since consumers are traditionally drawn to discounts on electronics. The Indianapolis-based chain made a bit of a ripple by announcing it was closing all 220 of its national stores.

Consumer aversion to shopping on Thanksgiving cannot be overlooked. Roughly two-thirds of people had no plans to shop in stores on Thanksgiving Day last year, according to a survey from the National Retail Federation. When asked if they would go shopping on Black Friday, almost three-fourths of the people who replied said yes.

E-commerce has put a damper on the rush to camp out and wait in long lines. More than 73 million people shopped online Thanksgiving Day, compared to 47 million who shopped in stores.

Businesses must must consider operating costs, which puts them down a considerable amount of money before they open their doors. Overtime pay, training temporary workers, increased security and other necessities to handle the heavy traffic start to add up quickly.

“You cannot technically force your employees. If you do, you’re going to get very unhappy employees,” said Serdar Durmusoglu, University of Dayton marketing professor. “So you have to give them incentives. It could be, ‘If you work on Thanksgiving Day rather than taking another day off some time in the future, you’ll have two days off.’ That’s going to alter the cost for the retailers. They have to think about if it’s worth giving two paid days of leave to an employee so they can work on Thanksgiving Day.”

The in-store experience is another factor in the decision to close during the holiday. Consumer happiness hinges heavily on speed and reliability, and retailers often fall short. Long lines at checkout are the top annoyances for shoppers during the holidays.

The problem is two-fold – regular employees don’t want to be there, and seasonal employees may not have adequate training. ShopperTrak, an industry analytics firm, recently noted the need to train temporary workers differently. They are often asked to do multiple tasks with less experience, a mistake that wastes the buyer’s time and costs the company money.

“It’s been much more difficult finding competent employees to fill the spaces they need during these seasonal time periods,” Deighan said. “By opening on Thanksgiving, their employees are not happy with it, and you’re not getting the best employees anyway.”

Opening at midnight on Black Friday or on Thanksgiving Day turned into a trend between 2011 and 2012. More stores opened earlier Thursday night in following years until several said enough was enough.

Last holiday season was the first time a noticeable amount of big-name stores refused to open their doors. In many ways, it wasn’t a difficult decision.

Buyers don’t feel the pressure of the sales rush because it’s easier to find discounts at different times, marketing expert Jayne Heggen said in an email.

ShopperTrak data found deals were spread out over more days in 2015 than the previous year. The discounts on Black Friday were not much better than those closer to Christmas.

“What used to be the Thanksgiving Day discount sales event is now stretched across Halloween (pre-Christmas shopping), Black Friday and Cyber Monday,” said Heggen, president of The Heggen Group. “I cannot claim there is a 1-to-1 ratio, but retailers are not likely to lose sales because of a shift in customer shopping or buying preferences. They shift to meet customer needs.”

HHGregg President and CEO Bob Riesbeck, while saying the decision was family focused, also acknowledged customers’ ability to find good prices at a later time.

“It’s important to us that our associates are able to be home with their families on Thanksgiving, and we are encouraging our customers to do the same – knowing great deals will be available online, on Black Friday and through the weekend,” Riesbeck said in a statement.

It’s unlikely Thanksgiving Day sales will go away anytime soon, something Deighan called “protective openings.” Stores will continue the practice, mainly to compete with Walmart, which started the trend five years ago.

“For them, it’s not about increased sales volume, it’s about protecting the sales volume,” Deighan said. “They don’t want their customers to go to Walmart and spend a couple hundred dollars on Thanksgiving Day because they were closed.”

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