Luke Davis: Black Friday was dark one for brick and mortar retailers
Anyone who knows me knows I love a deal. For that reason, Black Friday is one of my favorite days of the year. For more than 20 years I have been out before dawn the day after Thanksgiving, shivering in the cold waiting to be one of thousands of people flooding the storefront doors for a chance to get the latest electronic gadget at a deep discount.
In recent years, as more and more retailers have joined the trend of opening Thanksgiving evening, I have found myself doing less and less Black Friday shopping. As much as I love a bargain I refuse to sacrifice time with family and friends on this wonderful holiday for any item regardless of the price. However, enough retailers have refused to open their doors on Thanksgiving that I have always had a good reason to still go out on the hunt early Friday morning – until this year.
Like countless ones before it, my Thanksgiving began by waking up early and settling in with my paper to chart my course for the following day. But this year as I scanned the pages I discovered everything I wished to purchase was available that second online.
Knowing that these deals can disappear fast I did not hesitate to make my purchases. Shortly after wrapping up my online shopping I realized there wasn’t a single item that warranted going out the next day for. When guests arrived for Thanksgiving dinner I even offered to go shopping on their behalf. However, none of them had anything they needed either. I’m a little embarrassed to admit this, but instead of being excited that I could sleep in on Friday, I felt a little sad, like it was an end of an era.
I was not the only person who didn’t see a need to go out on Black Friday. According to retail tracker Sensormatic Solutions, U.S. brick and mortar store visits dropped by 52% this Black Friday, while online sales increased by 22% from its record breaking 2019 numbers.
While I knew the one-two combo of the pandemic and changes in consumer spending habits would lead to reduced traffic in stores. I was stunned to see how dramatic this shift was. I immediately asked myself what impact this would have on local communities already struggling in 2020.
While it will take time to accurately measure the economic ramifications of e-commerce dominance, my conclusion is this phenomenon is a dual-edged sword that will prove beneficial to some and devastating to others.
Obviously, large retailers have a significant advantage in the world of e-commerce. Their buying power and infrastructure allows them to offer fast shipping at a price small businesses simply cannot. I recently purchased a bicycle that was delivered to my door at a total price lower than it would cost a local bike shop to simply ship such a large item. Add to this, the logistical complexity of managing e-commerce websites and fulfillment centers and most mom and pop stores don’t even bother trying to compete with the Amazons of the world.
However, as the old adage goes if you can’t beat ‘em, join ‘em. Many small businesses have recognized the huge value companies like Ebay, Amazon, and even Walmart can offer to independent retailers by giving them access to their customers through their online marketplaces. For a fee, most large online retailers now provide access to outside venders to ply their wares directly on their sites.
This mutually beneficial relationship helps small businesses broaden their reach to buyers all across the world and gives these large retailers an additional revenue stream while at the same time increasing the variety of products found on their site.
Another entity impacted greatly by this rise of e-commerce are local governments. As the act of buying becomes more nationally and internationally centered, many local communities are feeling the pinch caused by lower sales tax revenue, and higher unemployment levels. When you support a local business, the majority of your money stays in the community in the form of wages and additional local spending. The same cannot be said for much of what is spent online. As more and more brick and mortar businesses close their doors, personal income, and property values go down and the downward cycle repeats itself.
For this reason I made a concentrated effort to participate in Small Business Saturday in an effort to recognize the importance of having a thriving Main Street. In my opinion, the rise of e-commerce is nowhere near its apex, and the impact it will have on how we live is yet to be determined. Hopefully it provides more good results than bad.
(Past performance is no guarantee of future results. Advice is general in nature and not intended for specific situations)
Luke Davis is the director of operations and compliance at Stewardship Capital in Independence.