Will retailers that open on Thanksgiving nite score with Xmas shoppers?

That’s the question I was asked by a reporter from the Washington Post yesterday

Here’s what I told her:

In general, Christmas shoppers operate against some sort of Xmas spending budget. That’s called a budget effect.

The budget may be conscious or subconscious — it can be explicit (written down in detail) or vague (e.g. spend no more than some amount).

A shopper’s budget typically has some stretch to it, especially if times are good. But, there is likely to be little or no budget stretch in tough times (like now).

One impact of early openings on retailers is a shopping days effect.

You might expect shoppers to expend their full budgets regardless of the number of shopping days available to them. That is, they’ll spend their budgeted amount whether there are 30 shopping days or 32 shopping days until Christmas. It doesn’t always work that way. There is some evidence that some money may end up left in shoppers pockets if they don’t have enough convenient opportunities to spend it.

So, added shopping days — or a part of a shopping day — tends to insure that consumers spend more (or all) of their budget.

The biggest impact on retailers is the market share effect.

Given the budget effect, retailers are fighting for a share of holiday spending budgets that are essentially fixed.

So, it’s to retailers’ individual advantage to get a first mover effect. That is, to have people spend money with them first, perhaps leaving less budget available for competitors.

The bottom line is that overall, sales may increase very slightly since shoppers have an extra opportunity to spend (the shopping days effect).

More important, this year, retailers that open on Thanksgiving night are likely gain share by getting into shoppers wallets sooner than their competitors, making sure that they get their fair share and maybe a little more.

Next year, market shares will likely reset as competitors follow suit and open earlier.

* * * * *

Side note: Many of the retailers opening on Thanksgiving are considered low-end merchants. Think Walmart. Higher-end retailers might tarnish their images by participating in T-day openings.

Let’s see what makes it into print …

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2 Responses to “Will retailers that open on Thanksgiving nite score with Xmas shoppers?”

  1. Bernard Nossuli Says:

    Prof. Homa,

    Thanks for the insight–I always find the psychological aspect of marketing/strategy fascinating.

    I’d tell you ‘Go Bears’ (who are undoubtedly better than the Skin), but I am very skeptical of the Hanie era….

  2. Ken says: “get to the pocketbook first” « The Homa Files Says:

    […] week I posted my talking points to a Wash Post reporter asking about retailers moving to Thanksgiving evening openings in advance […]

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