The Thanksgiving Dilemma: Is Opening Really Worthwhile for Retailers?

In Industry News, What's New by Jeff Prine

closed-thanksgivingNew York—In between the questions on Facebook about what door busters go on sales when, some customers took to ranting on Target, taking aim at the retailer’s decision to open early on Thanksgiving again this year.

Kelly Imer posted: “I don’t work at Target but I think it is horrible that stores are open on Thanksgiving Day. Not all people can work for the state, Government, have every holiday (the whole day) off.”

Commenting on a Thanksgiving recipe on Target’s Facebook page, Rachel Lista Hester posted: “Your own employees can’t even use these recipes because they have to WORK on Thanksgiving!!” Danielle Ninness wrote: “Thanksgiving never used to be about shopping. Stores were not open on Thanksgiving. Corporate greed is taking over our country. I used to work retail as well #familyovershopping.”

Target is far from being the only retailer opening on Thanksgiving. Other retailers such as Walmart, Best Buy, Macy’s, Sears etc. get similar remarks.

To Open or Not

In its recent survey of consumer shopping behavior on Thanksgiving vs. Black Friday, mobile shopping app Retale found that about 33% “hate” that retail stores are open at all on Thanksgiving Day. The majority–54%–say that they won’t be shopping in-store on Thanksgiving (of course that doesn’t preclude online shopping).

Indeed shoppers are 18% more likely pick Black Friday over Thanksgiving for deals.

Except for Millennials, 60% of them actually want to shop in-store on Thanksgiving. And75% of millennials will shop on Black Friday versus just 56% of non-millennials.

Two schools of thought have emerged on Thanksgiving Day openings. Some smaller retailers in mall locations have been pressured to open since their big box anchors will likely be open.

According to the Wall Street Journal, “Store managers say mall owners often threaten fines for staying closed on Thanksgiving but rarely collect on them. ‘Most of the time, we can call up the mall and they’ll waive it for the first offense,’ said one retail executive with stores in dozens of malls. ‘That’s kind of what we’re banking on this year.’

About half of the major mall owners sent tenants letters this month warning them that Thanksgiving hours were mandatory, this executive said. “The request is universal,” this executive told the Journal. “The enforcement seems to be random.”

Surely it seems like more retailers will start opening on Thanksgiving as pressure mounts from competitors.

“Walmart does it, and Target doesn’t want to lose out. It all comes down to a market-share game,” Brian Yarbrough, analysts at Edward Jones, said. “Once one [competitor] does it, they all feel they have to do it.”

Nonetheless, some analysts say that Thanksgiving openings may not pay off in the long run. What with most consumers shopping Black Friday to Cyber Monday, continued growth of online sales, rising expenses for opening and employee overtime costs.

TJX is campaigning that its TJMaxx and Marshalls stores will remain close so employees can observe the holidays. But off price retailers may be more in tune with keeping costs down since merchandise is always on sale.

Profitable?

Retailers haven’t been revealing their Thanksgiving Day sales and labor costs to show how worthwhile it is, Yarbrough said.

“None of the retailers last year commented on the profitability of Thanksgiving, but several said they were really pleased with the traffic levels,” Yarbrough said. “I have no idea if these sales are really profitable and if they’re making a lot of money on that day. And let’s be honest, it’s one day.”

With the growth of online sales, Yarbrough said he wouldn’t be surprised to see retailers backing off of opening on Thanksgiving Day in the future. The more consumers shop online, the less important it is to have brick-and-mortar stores open, he said.

Then there’s the view of Laura Crane, a Target employee for more than 23 years. In a retort to posters complaining about the store opening on Thanksgiving, she replied: “I have worked my fair share of Black Fridays. People complain about us working on Thursday night. Good grief people. When one works retail, you are entering a business where one works holidays. Thanksgiving is the busiest time of the year for retail. You do not want to work when you are needed, you are in the wrong job. Get another one.”