Monday 2 December 2013

Black Friday will turn a Canadian grey

Canadians get so much American content on TV and their personal portable entertainment devices that it's possible to think there's not a lot of cultural differences between our countries.

We also do so much of our import and export business with the U.S., that our economic behaviours should not differ that much, either.

But we've been hearing that story for decades, and our cultural and economic borders remain intact. The Canadian experience with the irrational phenomenon of Black Friday may just be the proof of it.

This year is a bit of an odd duck, as far as Christmas shopping goes. The season officially kicks off with Black Friday, which coincides with American Thanksgiving, which this year also coincides with Hanukah. Both also coincide with a season containing six fewer shopping days before Christmas.

Calendar buffs tell us such a triple confluence will not happen again until long after humanity is wiped out by an asteroid. Even then, surviving species will probably still line up overnight outside whatever Wal-Mart stores remain standing in what used to be the U.S.

And, as I heard one commentator remarkt, while still digesting the feast they ate to give thanks for all the stuff they already have.

But not in Canada. We're smarter than that.

Depending on whose web site you can trust, Christmas shopping can account for as much as 30 per cent of total U.S. retail sales, and 40 per cent of American retail profits.

That includes the deep discounts purportedly offered on Black Friday, and Cyber Week to follow.

Statistics Canada puts that figure at just 10 per cent of total retail sales for us, which is only 1.5 per cent above the monthly average. (To allow that percentage, January, February and March are significantly below average.)

Yes, Christmas shopping is indeed significant to our retail economy — it is the basis of the Christmas season as we have come to live it. But Black Friday will probably never catch on here the way it has south of the border.

Why not? Three reasons.

First, the Black Friday frenzy of violent shopping is already burning out in the U.S. Early reports show sales are down about three per cent from last year, and represent the first drop since the Great Recession.

Analysts point to a 17-per-cent one-year surge in online shopping as a reason. All those electronic devices shoppers got in previous sales are actually being used for their intended purpose: online commerce.

Second, despite the hysteria around the event in America, consumers are waking up to a realization the discounts, however deep, are less than they believed.

Consider clothing and fashion (which my friends remark that I seldom do).

In Red Deer, Hudson's Bay opened up at 7 a.m. on Black Friday and handed out $20 gift cards to the first 200 customers who crashed the gates. Compared to the videos we see from the U.S., reports say ours was a rather slow-motion crash.

But even at 40 or 50 per cent off that designer sweater, you're still paying $40 or $50. For a sweater consumers can reasonably suspect cost less than $5 to produce.

It makes you wonder who was ever dumb enough to pay full price.

Which plants the seed of the demise of Black Friday. Certainly, retailers offer loss-leader discounts on some items, but when the whole store is discounted all day (or longer) and they still make money, you have to wonder what's up about the rest of the year.

This leads to consumer cynicism, which leads to greater use of our first point: online searches for discounts year-round.

A third consideration is our more Canadian retailing tradition: the Boxing Day sale.

With the steady rise of gift cards as Christmas presents, Boxing Day sales are a far more logical follow-up. We get our Christmas presents twice; once under the tree in a nice envelope, and once again as a bonus discount on an item on Boxing Day (or Boxing Week nowadays).

And it's always just what we wanted for Christmas, because we pick it up ourselves.

The retail association spokespeople quoted on the articles I saw tell us the industry cannot support both Black Friday and Boxing Day.

It is more rational to delay gratification (while doubling it) on Boxing Day. That is why I believe Black Friday will remain grey in Canada.

Merry Christmas, and happy shopping to all.

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