Consumer Segmentation Is Future of Black Friday

 

When REI recently announced its campaign — saying that it would not participate in Black Friday this year by closing its stores and that everyone instead should go play outdoors — consumers on Twitter and Facebook were happy. People posted photos of tents and mountains and set their intent to spend the Friday after Thanksgiving doing something besides shopping. It was nice to see.

The best way to understand Black Friday’s future is via the accelerating growth in the number of working poor in this country. In a recent autobiography, “Hand to Mouth: Living in Bootstrap America,” Linda Tirado outlines how a mix of bad luck and no safety net threw her into a cycle of working poverty. It is a great read, but very uncomfortable because it makes clear how common and difficult poverty is in the United States even for those with an income.

Consider that full-time minimum wage earns $15,000 a year, but the federal poverty level for a family of four is $22,283. More than three-quarters of minimum-wage earners are adults, and in 2012, 15 percent of the population overall and 21.8 percent of children were living in poverty. The numbers are almost certainly higher this year.

Thus, many people in this country are slicing up a tiny pie to try to make a life.

Now, imagine getting a job without a cell phone or existing without a computer. In the future, more people will need more electronics just to survive but will not be able to pay standard retail prices for them. More people will feel that there is no choice but to line up on Black Friday to try to get a deal. Add to this necessity the less grave, but still notable, consequences of not having a television or gaming device for children in a society in which both are increasingly common and desired, and the distasteful nature of these sales — the crowds, the rushing and the stress — is offset by the benefits.

On the other hand, another segment of consumers is likely to grow more interested in leisure. Research shows that leisure activities, such as taking a trip or going to a nice restaurant, can lead to more lifetime happiness than material goods, especially when people are above subsistence levels in their consumption — when they are not in poverty and already have access to society’s necessities and common pastimes. These consumers are less likely to want a Black Friday experience, and the stores where they shop — usually more high-end places — are going to become less likely to offer holiday deals.

For businesses, this growing distance between segments means that if a company is catering to a clientele motivated primarily by price, such as Best Buy or Wal-Mart, then Black Friday is a good idea and probably will continue successfully. For all other companies, extremely low prices cannot offset inconvenience to the consumer. Instead, these types of retailers, such as REI, might do better to separate themselves from Black Friday by emphasizing leisure, convenience and quality of life.

Thus, a photo of Glacier National Park and a command to “go outside” are good marketing tools — but only when aimed at people who can afford to go outside instead of trying for an unusual deal. We are likely to see bigger Black Friday sales, but they are likely to be concentrated in fewer retailers over time.

Julie Irwin&;s op-ed originally appeared in the Austin American-Statesman.

Disclaimer

The views expressed are those of the author and not necessarily The University of Texas at Austin.
 

About The Author

Julie Irwin

Professor of Marketing and Business, Government and Society, McCombs School of Business

Julie Irwin joined the faculty in 1999. Her previous faculty appointments were at the Stern School of Business at New York University and the...

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