Here's Why Most Retailers Should Open on Thanksgiving

By Markets Fool.com

Black Friday has for many retailers become Grey Thursday as the traditional start to the holiday shopping season has moved from the day after Thanksgiving to late afternoon or early evening on the holiday itself.

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That's an unfortunate thing for those who liked spending a day off with family, basking in the afterglow of a big meal, watching football, and resting up for the busy times ahead. It's also unfortunate for the retail employees who would rather not work that day, but like it or not most large retailers have to open on Thanksgiving as long as their competitors do.

"Personally, I think retailers should be open every day," Stealing Share CEOTom Dougherty told Motley Fool via email. "Each day is an opportunity. Retailers like REI are closing on Thanksgiving because of some misguided PR attempt that will ultimately be useless. Shoppers aren't going to shop there on Friday because it was closed on Thanksgiving. Shoppers don't think that way. They shop at places that are open."

Dougherty, aBrainTrustcommentator on RetailWire (a leading trade publication for the retail industry) believes that shoppers have very little brand preference when it comes to stores. Instead, he wrote, people shop based on location, price, and availability.

"That's what retailers have taught consumers. They've made this bed," he wrote. "That's also why you must be open on Thanksgiving. You've taught consumers to shop based on convenience."

If stores are open, shoppers will come. Image source: Wal-Mart.

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It is a changing market

 

While not being open on Thanksgiving Day will cost a retailer sales that it won't gain back, the overall season is spreading out with sales beginning in early November and more shopping moving online.Jayne Heggen, President of Heggen Group LLC, told Motley Fool via email that she believes having an open website is enough for many retailers.

Brick-and-mortar sales on Thanksgiving Day dropped to $1.8 billion from just over $2 billion in 2014, she noted, adding that Black Friday sales suffered a similar dip. She blamed that partly on sales moving online and partly on stores offering discounts right after Halloween, blunting the effect of the Thanksgiving Day holiday shopping.

"No Brick and Mortar Retailers needs to be open on Thanksgiving," she wrote. "The economics simply don't justify it when there are so many more civilized online shopping opportunities available for thosewho feel they must shop on Thanksgiving Day."

Dan Rajaratnam, a clinical professor of marketing at University of Texas Dallas takes more of a middle ground. He cited a recent study by bestblackfriday.com, which showed that only 17.6% of Americans favor stores being open on Thanksgiving, while 54.69% want them to stay closed. But, he wrote, as long as some chains open, he believes it benefits a retailer to follow the trend.

"My suggestion is that retailers should open for a few hours in the evening of Thanksgiving Day, or better still, open at midnight on Thursday or the early hours of Black Friday to get a piece of the pie," he wrote. "Staying closed will only transfer sales to competitors."

The problem for big retailers is that as long as Wal-Mart (NYSE: WMT), Target (NYSE: TGT), Best Buy (NYSE: BBY), and other big retailers open, choosing not to follow suit will cost you money. Shoppers have a holiday budget, limited loyalty, and if some retailers are open on Thanksgiving they will shop there.

 

This trend is not going away

 

Even with the season stretching out and more sales moving online, the American consumer has shown a willingness to line up outside of Wal-Mart, Target, Best Buy, and other chains before they have finished cleaning up from their Thanksgiving meal. That means that there will be shoppers spending money and any chain which chooses to close has almost certainly done so at the cost of sales it will never see back.

"If the consumers desire it, stores will continue to open earlier and earlier on Thanksgiving, as has been the trend over the last few years,"University of Richmond Robins School Finance Professor Tom Arnold wrote in an email to Motley Fool. "I suspect that the current trend of being open on Thanksgiving will continue given the consumer demand that appears to exist."

As long as Americans keep creating demand on Thanksgiving stores have to open. Not doing so may be a nice idealistic stand -- and it might work for a specialty retailer like REI -- but for broad-merchandise retailers staying closed is putting ideals ahead of dollars. That's ultimately a disservice to shareholders and employees even if not opening on Thanksgiving seems like the right choice.

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Daniel Kline has no position in any stocks mentioned. He ran a retail store and would never have closed if his owner would have agreed with that. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.