Like all old codger stories, this one begins with the phrase, “When I was young.” I realize this is cliche, but it’s probably less annoying than using, “Before you were born” as an opening.
In any case, when I was young the Christmas shopping season began much more gradually. There was no “Black Friday” shopping blitzkrieg the day after Thanksgiving. The process took time and not everyone did it at once.
But today Halloween is over, and suddenly the Christmas decorations are out. The Christmas sales have begun. We roll our eyes. We joke. We grit our teeth. But but it still happens this way every year. People write op-eds about how ugly and consumerist America has become, because it wasn’t like this in the “Good old days.” Unfortunately our current grotesque, soul-crushing orgy of prolonged and rapacious spending was unavoidable. We all hate it, even as we participate in it. It’s nobody’s fault, really. It’s just the unintended consequence of a couple of perfectly understandable forces.
Let’s set aside the whole Birth-of-Jesus / religious holiday thing and agree that lots of people like to celebrate Christmas. Maybe they like the lights, or the food, or the family, or the notions of peace and harmony, but just about everyone enjoys the exchanging of presents on some level. Even if you don’t like shopping for racist Uncle Walt – who you only see every other year when he shows up to the Christmas party to complain about politics with his mouth full and drink more than his share of the booze – there’s an undeniable charm to seeing a kid’s face light up when they find a box with their dreams in it. Keeping the gift-giving to once a year ensures the proper level of delight and appreciation from the little ones. And it always feels good to get that one present for your friend that you knew they would love but would never think to buy for themselves.
Depending on what goods they sell and what statistics you believe, retailers move something like one-third to three-quarters of their yearly goods during the “Christmas shopping season”. If we split the difference and say halfYes I realize that’s not splitting the difference. But look, the numbers are all over the place. You can justify any figure you like, provided that figure is really large., then that means that half of everything you sell will be sold in the last month of the year. This creates some really annoying throughput problems. Assuming that business is evenly distributed throughout the rest of the year, it means you suddenly need your store to handle over ten times the normal monthly volume.
Stores have finite storage space. There’s only so much crap you can ram into the back area. And there’s an upper limit on how fast you can have more goods delivered, particularly if the weather is bad and everyone else is also trying to get huge volumes of stuff delivered. If you run out of goods – or if you just run low enough that it becomes inconvenient for people to shop at your store because they have a long list of stuff they want to buy and they want to make the smallest number of stops possible – then shoppers won’t want to come to your store. Losing out on a week of sales in August is worrisome. But losing out on a week of sales during the Christmas season is brutal. If Christmas accounts for half your sales, then missing a single week of Christmas sales will cost you a heart-stopping 12% of your annual income. To be clear, that’s more than the profit margins of some retail chains. Like, a 12% dip in income means you have to fire a few thousand people and maybe close some stores. And nobody wants to do that kind of stuff right after Christmas.
(This is usually where people start complaining about executive salaries. Look, I understand that it’s really upsetting to some, and I can understand if you oppose huge salaries on some sort of moral grounds, but executive salaries aren’t even worth discussing here. Wal-Mart made almost half a trillion bucks last year and the CEO got 25 million. If you took all his pay away and gave it to the employees, it would add up to just $10 per person, per year. The CEO salary accounts for less than 0.0052% of the company profits. If you made every single executive put double their salary back into the company coffers, it wouldn’t increase revenue by a tenth of a percentage point. Maybe you don’t like the idea of people making twenty five million bucks for a cushy desk job, but the truth is that on the scale of global mega corporations their incomes just do not matter. So please don’t sidetrack this with stuff about salaries. Let’s just forget that for now and focus on retail throughput, which is a much more interesting problem.)
The point is: Retailers hate this as much as we do. The Christmas shopping season is rife with risk and unwanted expense. They have to hire a bunch of temp workers and pay to train them. So they’re paying more and getting lower quality work. They have to pay a premium to have huge volumes of goods delivered at a time where everyone else is also having massive goods delivered. The influx of stuff means everything is packed tighter. Goods get crushed, broken, stolen, and lost, on both a macro and micro scale. From the shipment that got left in the warehouse an extra week to the USB speakers that fell off the pallet and got crushed under the boxes of plastic Christmas lights, the uptick in volume results in a broad range of financial losses.
Retailers would love it if our business was spread evenly over the entire year. But the mess we’re in now was as inevitable as the seasons. It began innocently enough…
I’m running Stuff-Mart. On the other side of the shopping plaza is my hated rival, AmeriGoods. I know that Shoppers are going to show up in December and buy tons (literally!) of goods. Now, I can order those goods in November like I normally would. However, those assholes over at AmeriGoods are going to do the same thing. Since we carry a lot of the same stuff, we’re both talking to the same wholesalers. Those wholesalers are going to crank up their prices when the demand spikes. Worse, the cost of shipping is going to also spike in November, both because gas prices always go up then and because truckers want to spend the holidays with their families. Oh, and also because AmeriGoods is shipping stuff too. Jerks.
But! I can get those same goods way, WAY cheaper if I’m willing to order them just a couple of weeks sooner. Maybe have the stuff arrive in mid November instead of early December.
It works out, and my profits go up. I pay less for the goods and I sell them for the same price. The only cost is that the back storage room of my store is kind of overstuffed for a couple of weeks.
AmeriGoods has caught on to my plan and they’re ordering their stuff a couple of weeks earlier. So I have to order my stuff even sooner to stay ahead of them. After a couple of years of this we’ve got Christmas goods coming in at the tail end of Halloween. We literally don’t have room for it in storage. The best we can do is shove it out on the sales floor and maybe catch some early sales.
Both my store and the filthy shysters over at AmeriGoods are both starting our big Christmas sales right after Thanksgiving. We tried moving it sooner than that, but consumers hated that. Heck, they hate seeing the stuff on the sales floor that early, so putting it on sale and advertising it just pisses them off even more.
But still. The back room is so stuffed we can barely function. I need to front-load as much shopping as possible to get us some breathing room. My plan this year is to have a huge sale right after Thanksgiving. I’ll put a couple of limited quantity loss leaders in the paper. I’m hoping two hundred people will show up looking to buy one of the VCR / television hybrids that I’m selling at a loss. I’ve only got 50 of those, but the other 150 people will probably stick around the store and do the rest of their Christmas shopping here. That should free up some space for the customers in December.
It turns out my idea worked better than I could have dreamed. I didn’t get 200 shoppers, I got a thousand. I think I’m onto something here.
This whole “Day after Thanksgiving” thing has caught on. They’re calling it Black Friday now. People are expecting huge deals. If I don’t have some insane sale to draw them in, then they’ll all go to AmeriGoods and I’ll end up drowning in all this stock. I’ve already lined up my December shipments. (Just like shoppers are starting earlier every year, so am I. I have to line up deliveries way in advance, before the prices spike.) If I don’t move literal tons of goods on Black Friday, then when the December stuff arrives I won’t have room for it in the building. Then it will sit in the loading bay until it’s stolen or ruined by weather. So I have to move these goods.
Hm. You know, consumers won’t stand for the big sale before Thanksgiving, but what if I just opened early on Black Friday? It wouldn’t have to be super-early or anything. I just need to be open an hour before AmeriGoods.
I guess I should have seen this coming. We now open at 5am on Black Friday. The crowd of early shoppers is large enough to be a physical danger. The employees don’t want to be here, the shoppers say they hate it but show up anyway. The news is always parked outside getting footage of people standing in line and blaming S-Mart for this mess.
This is the same throughput problem I had in the 80’s, except now more concentrated.
|♪ ♫ ♬’tis the season to be jolly!♪ ♫ ♬|
Before we heap blame on “evil corporations” or “dumb consumers”, we ought to note that this is actually a pretty natural result of consumer demand: People want to buy HUGE quantities of goods at the end of the year, but they don’t like doing it before Thanksgiving. This wave of shopping is so huge that a company can thrive or perish based on how well they perform. This entire mess is the result of retailers trying as hard as they can to distribute those sales as much as possible without having their competition ninja the first sales (the best ones) away right at the start.
My hope for the future is that the wave of online shopping might save us. I’m willing to bet it’s more efficient in terms of time, cost, and fuel burned to have dedicated delivery vehicles bringing stuff to our door as opposed to everyone driving to the mall, fighting over parking, and standing in line for hours to get the same stuff. (Yes, those UPS delivery trucks are fuel hogs, but if you distributed its payload among fifty cars and had them all compete for driving and parking space, my guess is that you’d end up burning a lot more fuel and a lot more hours of human time.)
Just like the rise of Black Friday didn’t happen overnight, I think the rise of online shopping will take a few years. I wonder what will happen to retailers. They’re already struggling, and even having a third of their Christmas business vanish is enough to kill some of the smaller chains. Plus there will be residual damage to secondary markets: Fast food places will make less money if there are less hungry shoppers.
Anyway. Happy Halloween. Remember: Nobody in this mess is really evil. This is not a conspiracy. We’re all victims of limitations to throughput and infrastructure. Be good to those clerks, be patient with the other shoppers, and remember that the executives don’t know how to fix this either.
EDIT: Boy howdy! I sure am glad I said, “please don’t sidetrack this with stuff about salaries.” Otherwise we might have fallen into the old Keynesian vs. Austrian economic debate tarpit. Man, that would be crazy, right?
Comments closed. Too much politics.
 Yes I realize that’s not splitting the difference. But look, the numbers are all over the place. You can justify any figure you like, provided that figure is really large.
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