Canadian Black Friday: A Tradition ‘Pulled’ From The States

Posted in Retail
By Laura Leslie on January 23, 2017

istock-496650255-twogirlsshopping-1Black Friday hasn’t always been a Canadian tradition, in fact only 8 years ago Canadian’s were still quietly judging Americans for their alarming behaviour only hours after celebrations of giving thanks. But, with the Canadian retail market slowly on the decline and our dollar often following suit retailers felt the need to keep sales north of the border.

Black Friday as an American tradition dates back as early as 1869 when Jay Gould and Jim Fisk, two revered Wall Street financiers conspired to purchase a mass amount of the Nation’s available gold in hopes of driving up its value. On a particularly dark Friday in September, their ill-fated plan backfired, the stock market crashed and everyone was left filing for bankruptcy.

Fast-forward another 90 years and Black Friday takes on a different, equally dark meaning. In the early 1960’s Philadelphia police are said to have coined the term “Black Friday” in referring to intense chaos on the streets immediately following Thanksgiving. Police dealt with mass crowding, over congested streets, unruly traffic and consequently a drastic increase in petty crime.

Decades later retailers decided to take a positive spin on the term Black Friday and turn it into the shopping phenomenon that it is today. In accounting, losses are said to be recorded in red, while profits are recorded in black. Therefore, Retailers now claim that Black Friday refers to the beginning of a profitable season where they can expect to be seeing their sales go into the black!

Canadians, not sharing the same Thanksgiving as Americans, watched from the sidelines for years as potential customers ventured south of the border to capitalize on outrageous deals before the holiday season. As the Canadian retail landscape continued to see a decline in profitability retailers began to question their decision to exclude themselves in the American festivities. It wasn’t until around 2008 that Canadians finally decided to bite the bullet and join their neighbours.

In 2012, Canada saw its first truly successful Black Friday and since then we’ve seen exciting exponential growth each year.

                                     Popularity of “Black Friday” in Canada. Source: Google Trends

As the Black Friday excitement grows for Canadians, so does the hope for Canadian retailers. In 2015 sales for  retailers had grown 0.3% from the previous year. Many attribute the growth to the increasing popularity when considering that Canadians spent 25% more on Black Friday than they did on Boxing Day last year.

As retailers, abstaining from Black Friday can be really difficult given the risk of missing out on the orchestrated consumer spending frenzy. While some have managed to ignore it in a manner consistent with their brand identity, other retailers do so at greater peril.

Interestingly, however, two observations provide some insight into where opportunity with extreme promotional spikes might lie: 1) There is strong evidence of post-Black Friday lulls – often called a “pull-forward” effect; and 2) Black Friday drives relatively high acquisition and reactivation, but very limited post-Black Friday repeat shopping behaviour.

In the case of the former, non-participation is often a no-go, but smarter applications of mass promotion tactics (e.g. what are the right promotion mechanics? How deep should the discount be? How much inventory can I anticipate requiring?) can be a huge help.  Waleed Ayoub, Rubikloud’s CPO explains, “especially through machine learning, can retailers markedly help make the promotional periods more efficient. Furthermore, having true 1:1 capabilities can go a long way in offsetting the post-Black Friday lull by incentivizing with exclusive offers.”

In the case of the latter, any opportunity to acquire or reactivate lapsed customers should be valued. It’s the part where they very rarely return that should be cause for concern. Ayoub goes on to add that “through our experiences with retailers, the costs of reactivation can often be higher than acquisition.” This is likely due to the heavy incentives used to drive acquisition in the first place – training customer to expect more to repeat a visit. Knowing this ahead of time can empower retailers to experiment with more appealing, machine-learning curated journeys and incentives to not only, trial but also repeat – something Rubikloud could help with!

It is great to see that Canadian’s have successfully adopted the Black Friday experience over the last few years with Canadian stores offering consumer goods at huge discounts, some even starting sales weeks in advance! But, we haven’t adopted the American mentality. Here in Canada, the on-going joke is that we are too polite, people share with one another, offer their place in line, and say sorry even more than normal. Canadian’s know how to keep it civilized… or maybe we are just saving our energy for cyber Monday!