Thanksgiving, best retailing strategies

Macy’s made headlines earlier this month after announcing it would push up its opening hours on Thanksgiving Day to 5 p.m — an hour earlier than the year before. But the retailer’s decision to open its doors on the holiday is far from radical.

Macy’s has consistently opened on Thanksgiving Day since 2013, as have many other big-box retailers. Over the last several years, competition between retailers like Wal-Mart, Kohl’s, Best Buy, Target and J.C. Penney has driven doorbuster promotions earlier and earlier — a phenomenon aptly known as “Black Friday creep.”

et this year, many retailers are reversing course and plan to close on Thanksgiving Day. Mall of America, Office Depot and hhgregg are just a few that threw in the towel after previously opening on the holiday. In public statements, retailers said their motivation to close was to let employees enjoy the day off with their families. While that may be true, the reality is that opening on Thanksgiving may not make financial sense for most retailers anymore: The dilution of Black Friday as a single-day shopping bonanza has spread sales throughout the weekend, meaning that most specialty retailers won’t see significant gains from opening on Thanksgiving, according to Moody’s lead retail analyst Charlie O’Shea.

Many retailers have been pressured to follow Wal-Mart’s lead on early promotions during the week leading up to Black Friday, O’Shea said. While most have been disappointed with the results, department stores may be one of the few retailers to reap the rewards of opening on Thanksgiving itself.

For years, retailers have held special early morning Black Friday hours. In 2011, retailers such as Kohl’s, Macy’s and Target pushed up those hours to midnight, and a year later, Wal-Mart announced it would open at 8 p.m. on Thanksgiving Day. Since then, the retailer has pushed its opening hours as early as 6 p.m., while others have followed suit.

Wal-Mart was the catalyst for Thanksgiving Day openings throughout the retail industry, Moody’s O’Shea said. Wal-Mart has historically opened on Thanksgiving Day to pick up food sales from procrastinating grocery shoppers who need a last minute dish. Competitors like Target quickly caught on to the early promotions, and the retailer continues to open on Thanksgiving to keep up competition against Wal-Mart.

Specialty retailers like Gamestop, Old Navy, American Girl and others have also latched onto the trend in past years, but haven’t seen nearly as much success. “We have seen too many instances of apparel retailers having to promote heavily the week after Thanksgiving, which is an indication that sales were slow over the weekend,” O’Shea said.

Even Wal-Mart is pulling back on heavy promotions. Last year, The Wall Street Journal reported Wal-Mart would first offer doorbuster Black Friday discounts online on Thanksgiving night, but they would not stretch the deals over a five-day period as it had done in the past. Instead, the retailer said it would cut prices over the entire holiday season.

The reality for most retailers is that staying open on Thursday often means less business for the Friday and Saturday afterward, Marshal Cohen, chief industry analyst at the NPD Group, wrote in an email to Retail Dive.

For many retailers, the costs of opening on Thanksgiving may not be worth it.

If retailers expect shoppers to take the time to line up before doors open, they should also be able to deliver a unique customer experience, Alden said.

Retailers should also consider whether they have the ability to sustain inventory throughout the five-day holiday, as well as having enough staff willing to work on the holiday.

Whether retailers open or close on Turkey day also depends on their brand and core customer base.

But for retailers like Wal-Mart — which depend much less on assisting customers and providing an experience — Alden said the choice to open is more of a pure operational question. As a retailer with many 24/7 locations, adding Black Friday promotions on Thanksgiving is on-brand for Wal-Mart. “We need lines moving, shelves stocked — those things. I think it differs by retailer,” Alden said. “I think what plays into it is how strong are their digital channels. [A retailer] may be closed down the street, but virtually open and can capture digital sales.”

Retailers with strong digital channels — such as GameStop, which has opted to close on Thanksgiving the last several years — can drive online doorbusters and other unique deals on important days, such as when popular games are released.

But some retailers are certainly finding reason enough to open on the holiday. On Monday, the two largest U.S. mall developers, Simon Property Group and General Growth Properties, announced their shopping centers will be open on Thanksgiving. Although individual retailers aren’t required to open, a Simon representative told Fortune that the majority will not close.

For mall developers, department stores and big-box retailers, staying open on Thanksgiving often makes sense if that’s what the competition is doing.

From RetailDive