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Black Friday and Consumer Electronics: A Match Made In Retailing Heaven

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Black Friday, the day after the Thanksgiving holiday in the US, may be the most important day for retail consumers and operators alike.  The day ignites the holiday shopping season that leads up until Christmas with an explosive blitz of sales and promotions by the largest retailers across the country. And it is consumer electronics products and promotions that continue to be the focus of the day, as these products become increasingly integral parts of life for both consumers and retailers. Typically, these products are the cornerstone of Black Friday purchases, and 2013 was no different as consumers and retailers alike focused much of their attention on the retail consumer electronics market that is projected by Euromonitor International to reach US$98 billion by the end of 2013.

Consumer electronics have become the foundation of Black Friday’s deals because of their multi-demographic appeal. The category is filled with products for men, women, and children of all ages and the constantly evolving technology allows consumers to trade up at almost any given time. Due to this broad interest, retailers have increasingly focused on consumer electronics, often centring their promotions on the latest and greatest technology. Wal-Mart Stores Inc, in preparation for the increased demand, stocked more inventory than ever, carrying 100% more tablets and 65% more televisions according to their chief merchandising officer. By their own estimates, the strategy ended up being a success, as the retailing behemoth sold 2 million televisions and 1.4 million tablets on Black Friday in 2013. To put that in perspective, the retailer sold 1.9 million dolls that same day. Additionally, this would have constituted 6% of all television sales in 2012 across the US.

Despite the much lower margins, retailers can exit Black Friday with a sense of triumph just like their consumers by relying on a few key strategies. By looking at the numbers above, clearly volume is one component, but occasionally retailers will take losses on some items just to increase total foot traffic on the day. Not only do those deals get customers in the store, but the money they save on their consumer electronics purchases can then be used on higher margin items like accessories and services. A consumer that gets a great deal on a mobile phone can use the money they saved to buy a case for that phone and insurance that they might not have bought otherwise. The high volumes are great for retailers with lower margins and consumers with higher demand for lower price points. The additional purchases allow those vendors to sell items and services at more sustainable margins while customers feel as though they have gotten more value for their money, resulting in a win-win situation for both the retailers and the shoppers.

An Unstoppable Force

The appeal of Black Friday is so strong that it is no longer confined to just Friday or even brick and mortar retail outlets. Wal-Mart Stores Inc and Amazon.com Inc, retailers that account for a combined 11% sales share of the retail market, both issued run up pre-promotions for over a week before Friday. Even more retailers have begun to open their stores on Thursday to kick the event off even earlier, a move that is considered offensive by many considering that the day continues to be the second most important family holiday behind Christmas. The Monday following Black Friday is also now officially known as Cyber Monday, essentially making it the Black Friday for online shoppers. With sales increasingly being spread out before and after the single day, it is not out of the question to predict that consumers will soon be preparing themselves for Black November.

Consumer electronics, a category where dollar sales grew by a CAGR of 2% from 2007-2012, will only see its role further entrenched in this shopping season. This will be aided by the fact that mobile and online shopping will continue to gain share as younger, more tech savvy users gain more purchasing power. The largest online payment processor, PayPal Inc, reported that mobile payments jumped 121% on Black Friday in 2013 compared to the previous year. According to the Consumer Electronics Association online sales of consumer electronics set records as 55% of all purchases were made online, with tablets being the most popular item. As retailers realize the best ways to integrate these mobile payment systems into their Black Friday sales they will be able to expand their presence within and beyond the physical store. These vendors can harness the fact that consumers are using mobile devices for a larger share of their shopping to promote the newest and most sophisticated versions of those devices which they use so much, fuelling the cycle for years on end. And even if they are satisfied with their current phone or tablet, there will always be something that is newer and more improved in the consumer electronics sections to entice consumers across the country.

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