“Christmas Creep,” the “technical” term for the pre-holiday appearance of retail decorations and promotions, crept into stores and marketing in October this year.
Major department stores are even pre-empting Black Friday by opening on Thanksgiving Day.
Is starting the holiday shopping season earlier and earlier a good marketing move or could it backfire?
Four marketing professors at Washington University in St. Louis’ Olin Business School discuss this phenomenon.
Chakravarthi Narasimhan PhD, the Philip L. Siteman Professor of Marketing:
“It is very difficult for any retailer to scale down the size of the operations in the near term. So, given their cost positions, they compete aggressively for market share of the customers. During tough economic times, the total available retail money shrinks, as is evidenced by the recent earnings reports from Wal-Mart, Target etc., which exacerbates the aggressiveness among these retailers.
What we are seeing is the result of that. If no one does anything, then one retailer may correctly think that he will gain competitive advantage by engaging in this ‘Christmas Creep.’ But, if everyone thinks that way, everyone follows suit and the industry as a whole may or may not be better off. If consumers open their wallets more and spend more because of all this, then collectively perhaps the retailers may become better.
But, if the total retail dollars do not increase sufficiently, then most retailers may be worse off because of cost increases in going early as well as deeper discounts that may follow. There could be a slight first-mover advantage to the retailer who moved first since consumers may recall that retailer more and search that retailer first.”
Carol Johanek, adjunct professor of marketing:
“’Christmas Creep’ has been happening for years and reflects the fact
that these retailers are responding to the needs of their market
segments. The holiday season, of course, is a key selling time for
retailers, and with the time frame being especially short this year
between Thanksgiving and Christmas, it is not surprising to see these
brands setting up their promotions earlier on the calendar.
With our slow recovery, there is less hiring, more stagnated wages
and individuals — specifically lower-income, price-sensitive shoppers —
love the special promotions, lay-away options and early deals. Although
there are studies that show consumers are not happy over the earlier
holiday promotions, their behavior says something very different.
Crowds continue to patronize Black Friday;
this year resulting in not only more days for these events but longer
store hours. Shoppers of retailers such as Kmart, Wal-Mart or Target
love the idea of coming home after getting those special deals from
their brands and engaging in the excitement at these events. Many brands
are using sites such as Pinterest to communicate their great holiday
promotions this year. This could be a great opportunity for such brands
to build connections with their customer base for the rest of the year
ahead.”
Joseph Goodman, PhD, associate professor of marketing:
“Black Friday deals are a classic loss-leader strategy. Retailers are trying to get these products out in front so they get people into the store. They may lose a few dollars on those particular items, but they will make up the money when people buy two or three other things.
There is some research evidence that indicates consumers are focusing less on material values and more on acquiring experiences. It might be that they are actually shopping for an experience. Research says that when consumers spend money on experiences, they actually end up being happier and more satisfied with their life than when they are purchasing material goods. So there might be a silver lining in all of this.
I just wonder how long will it take until Thanksgiving is completely a shopping day and it turns into Black Thursday.”
Martin Sneider, adjunct professor of marketing:
“Retailers have been pushing Christmas décor, merchandising, and promotions earlier and earlier for many years. It seems almost quaint now, but there was a time not so long ago when retailers waited to take markdowns until AFTER Christmas. Now price busting begins in early November and reaches its twin peaks during Thanksgiving week and the week BEFORE Christmas.
With the media spotlight on retailing during Thanksgiving weekend, price cutting and door busters are forms of MAD (Mutual Assured Destruction) where retailers try to outdo one another by slashing gross profit to unsustainable levels. All want sales momentum going into the holiday season, which accounts for a huge percentage of retailer sales and profits. Reporters in helicopters circle over crowded parking lots; lines of bundled-up shoppers snake around store entrances, and smiling customers with shopping carts festooned with holiday purchases fill the airwaves and newspaper.
With a much shortened holiday shopping season (a very late Thanksgiving means four or five fewer shopping days this year), retailers are starting even earlier, with some opening Thanksgiving Day and others Thanksgiving evening. Two notable exceptions are Nordstrom and Costco, which won’t open their doors until after Thanksgiving.
Two possibilities for earlier openings: 1. Those opening earlier will capture more market share…after all, lots of folks are stuffed full of turkey and have seen enough of football and family and ready to spend; and 2. Holiday business will merely be spread over more hours with no discernible increase in the total. Many retailers are betting on the first possibility, which means the second possibility is the likely outcome: more store hours with no real increase in business.”