Many "Black Friday" shoppers may come for the deals, leave empty-handed
Editor's note: This story is one of several holiday-related features that will be published by IU Media Relations over the next few days. This note at the top signifies the story's inclusion in the holiday packet.
BLOOMINGTON, Ind. -- Retailers slash prices on popular products and spend millions of dollars on advertising to draw consumers into their stores this coming "Black Friday," as the day after Thanksgiving is known in the retail industry, and throughout the holiday season. But how do shoppers behave once they're inside the store? According to a new Indiana University study, they often walk out without making a purchase.
Ray Burke, the E.W. Kelley Professor of Business Administration at IU's Kelley School of Business, wanted to find out whether legends about the customer stampedes the day after Thanksgiving and the last-minute shoppers on Christmas Eve were really true. He wondered if stores were doing an effective job of transforming the high levels of consumer demand during the holidays into purchases.
To address these issues, Burke partnered with a major consumer electronics retailer to study shopper behavior during the 2003 holiday shopping season. The research team selected two stores in the Midwest that reflected the demographics of the U.S. population and observed how customers shopped during the entire holiday season -- from before Thanksgiving through Christmas.
The findings confirm many of the stereotypes about holiday shoppers but also suggest several opportunities for retailers to improve the customer experience and retail performance this holiday season.
"One would expect that any shopper who made the effort to visit a store on Black Friday would buy something. Surprisingly, many people left the store empty-handed," Burke said. "The average purchase conversion rate -- or the percent of adult shoppers who bought -- on Black Friday did not exceed 44 percent in the first few hours, and averaged only 31 percent for the entire day."
Black Friday is one of the busiest shopping days of the year. Consumer shopping patterns on that day were unlike any other during the 2003 holiday season. Despite cold and rainy weather, shoppers arrived before dawn and lined up around the building waiting to buy deals, such as $20 DVD players, $130 video cameras and $200 computers.
When the doors opened at 6 a.m., 650 people poured into the store in the first 10 minutes. In the first hour, over 1,400 shoppers entered the store. "To put this in perspective, traffic on a typical Saturday afternoon might be in the range of 200 to 300 shoppers per hour, and numbers typically approach 600 shoppers per hour on the weekend before Christmas and on Christmas Eve," Burke said.
Burke observed that people entering the store during those early hours were clearly destination shoppers who were anxious to buy. They traveled light, leaving the kids, heavy coats and handbags behind. Most were familiar with the store layout and walked quickly to the desired products. In some cases, they used team-shopping techniques, where one partner held a place in the checkout line, while the other rushed from aisle to aisle looking for hot specials.
The level of activity was especially frantic during the morning, as people hurried to complete their purchases before the noon deadline on early-bird specials. Despite the commotion, people were generally polite and even-tempered.
"Given the huge numbers of customers, it's not surprising that the transaction volume during Black Friday was the highest for the holiday season, with hourly sales rates that were two to three times greater than other shopping days," he said. "The number of products purchased per buyer was also significantly higher on Black Friday."
People appeared to be stocking up on hot promotional items and gifts for the holidays. The average basket size peaked at five items for those early risers who completed their purchases before 8 a.m. Most buyers during the day purchased two to three items. But again, many ended up not making a purchase at all.
A lower percentage of shoppers bought on Black Friday than the Saturday before Christmas (44 percent) or Christmas Eve (48 percent). In fact, the percent of buyers was even lower than on a pre-holiday weekend (Nov. 21-23) when an average of 33 percent of adult shoppers made purchases.
"From customer observation and personal interviews, it appears that the low purchase conversion rates on Black Friday were due to several factors, including long checkout lines, an overwhelmed sales staff, crowding, which limited access to some parts of the store, and out-of-stock conditions," he said. "In some cases, shoppers with only one or two items gave up and left rather than waiting in line. These issues were typical of many other retail chains during the holiday weekend."
The volume of shopping activity subsided somewhat after the Thanksgiving weekend but picked up again as the number of shopping days counted down to Christmas with a steady increase in customer traffic and sales. Purchase conversion rates peaked on Dec. 23 and 24 as people rushed to complete their shopping. While the total number of people buying products was quite high, many of these were "fill in" purchases of just one or two last-minute items. Not surprisingly, most people waited until after Christmas to make returns.
And what about that old saying that men wait until Christmas Eve to shop? "It's true! Most of the lone shoppers on Christmas Eve were men," Burke said.
So what can retailers do this holiday season to create a more enjoyable and productive shopping environment? "Creating a great customer experience is critical throughout the year, but it's a special challenge during the holidays when the stores are crowded and shoppers are rushed," Burke said.
Here are a few of his suggestions:
- Give shoppers more time. Extend the period when promotional items are on sale, or stage different promotions throughout the Thanksgiving weekend.
- Streamline the process. Keep aisles free of obstacles, and position and merchandise hot items so that they are easy to find.
- Make it fun. Provide refreshments, music or other entertainment to keep shoppers happy. Burke quoted Walt Disney, who once said, "People spend money when and where they feel good."
- Hire more elves. Expand the number of salespeople to enhance customer service, and speed the checkout process by opening more registers and using remote checkout stations and handheld "line-buster" devices.
The Kelley School is home to the Center for Education and Research in Retailing. The center is a leader in the application of technology to retail education and research. The Kelley School is also host to the Customer Interface Laboratory, a state-of-the-art facility for investigating how customers interact with new retailing technologies.