Question

Black Friday – the day after Thanksgiving represents one of the biggest shopping days and marks the first official day of Christmas shopping. However, in 2018 sales on this day were 9% lower than the previous year and represent a trend in the retail market – revenues of departmental stores have either remained stagnant or declined (Macy’s stores revenues between 2008 and 2018 stayed stagnant around $26B and JC Penny actually experienced a decline during the same period from $20B to $13B. On the other hand, online giant, Amazon revenues grew from $19B in 2008 to more than $230B). There are similar downward trends of other brick & mortar department stores and a growth in online purchases by consumers.

Explain the principal factors (demographic, socio-economic, lifestyle and behavioral), which have contributed to these trends. Offer specific marketing and economic strategies in which traditional departmental stores/grocers can adapt/reposition their competitive positions to remain viable/profitable.

Answer 1

A cultural factor (lifestyle and behavioral) is that people like to spend time in family during thanksgiving, and interrupting the family meeting in the middle of the night or waking up early the next day to go to a store is not something a lot of people find enjoyable during the holiday.

A socio-economic factor related to the cultural explanation above is that people would rather shop online and have things delivered to their houses. It is not only more comfortable, but many times cheaper as well as more convenient. This is the main factor behind Amazon's great success.

It is very hard for traditional retailers to compete against Amazon. Best they can do is either develop closer ties with Amazon in order to make use of Amazon's delivery network, or to set up their own online shopping and delivery services. People tend to respond well to market competition online, and the predominance of one single commercial behemoth can easily become contested.

For example, a couple of years ago Netflix dominated the streaming market. Nowadays, there are several competitors in the market: Hulu, Prime, Disney+, and more are to come. Netflix has been losing market share ever since. Same thing could happen to Amazon if Walmart, Target, JC Penny, Costco, and many others start their own versions.