Last year, I posted a few items related to how stores manage their queues for Black Friday. I still think this is an interesting question. Standard queuing models don’t really apply since the lines are transitory and the objective is, at best, non-standard. A typical queuing model would aim to minimize customer waits given available resources or to use the fewest resources to hit a service target. But for Black Friday it seems that a more appropriate objective is to get as many people in the store as possible given a certain set of attractive deals and available inventory. Thus it matters whether you tell people in line if they still have a shot at the laptop or the big TV.
It should be noted, that the number of units available can be really small (Black Friday 2010’s dirty little secrets, Nov 19, CNNMoney):
Limited supplies: Read the fine print on the Black Friday circulars.
Most doorbuster deals — especially those on big-ticket items like HDTVs and washer-dryer combos — are in very limited supplies, often only four to six units per store. So unless you are among the first six on line before stores open on Black Friday for those deals, you’re pretty much out of luck.
Retailers use these juicy deals to entice shoppers into their store, that’s when the switcheroo happens. Even if you didn’t score the bargain you wanted, sellers hope that since you are already there, you’ll probably grab some other deals instead.
But that is all last year’s news. The news this year is competition in hours of operations. The Wall Street Journal reports that Sears and other retailers are opening earlier — indeed, even on the holiday itself — to get more people to come in (Black Friday Creeps Into Thanksgiving, Nov 22).
But an increasing number of stores are getting a jump on the Friday shopping hordes by opening on Thanksgiving. Some retailers say they are offering a convenience for shoppers who want to beat the madding crowds.
Retail experts say it’s an attempt for stores struggling to boost sales in the stubbornly slow economic recovery to grab market share. …
Sears says it decided to open on Thanksgiving to give consumers an additional day to shop. …
Gap Inc. opened about three-quarters of its Old Navy stores last Thanksgiving and the response was so “tremendous,” says a spokesman, that it is opening about 90% of them this year. A handful of Gap and Banana Republic stores will be open again this year. Old Navy is open from 9 a.m. to 8 p.m., but the hours at Gap and Banana Republic vary by location.
The article raises the most obvious question:
“Who is going to be at Sears on Thanksgiving?” asks a skeptical Mr. Sozzi.
So how does this play out in the whole Black Friday scheme? We have a set of stores all vying for a slice of shoppers’ holiday spending. How much a firm captures will depend on the attractiveness of their deals (i.e., how low will they go), the depth of their inventory, and some measure of convenience. Low prices and lots of inventory gets expensive. Providing more shopping options is likely a cheaper way to compete. Of course, being able to ditch the in-laws on Thursday doesn’t really compare to shopping on-line when it comes to convenience and the article points to the rise of e-commerce as one of the reasons more stores are opening on the holiday. Amazon is always open, and Sears might miss some sales as a consequence.
What I find interesting about this is the way it may serve to segment the market. Suppose the market is split between those willing to shop instead of watching football (as God intended) and those who will not skip watching the Lions. Stores open on Thursday get the Lion-haters while Lion fans head out on Friday morning. What stores should they go to? The ones that were open on Thursday are presumably picked over. Thus a store like Kohl’s that has committed to staying closed on Thursday has also committed to having a full selection on Friday. If the segment who is only willing to shop on Friday is either larger or just willing to spend more, waiting until Friday could be the more profitable strategy.