Prof G Markets: Black Friday, Cyber Monday, and Consumer Culture

In this special edition of Prof G Markets, Scott shares his childhood experience of holiday sales, as well as his thoughts on a new retail tactic that’s driving consumers to stores. We also hear from Katherine Cullen, the senior director of industry and consumer insights for the National Retail Federation, on the state of retail sales in an inflationary, post-corona economy. Scott closes out the show with advice to those who’ve been laid off ahead of this week's unemployment numbers. Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Scott Galloway?

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• 0:48Speaker 01

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• 1:18Scott Galloway?

  This week's number, 12%. That's the percentage of Black Friday shoppers who are drunk 60% of the time. Alcohol works 100% of the time for the dog.

• 1:35Scott Galloway?

  That was good.

• 1:47Scott Galloway?

  Welcome to PropG Markets. We've got a special episode for you today focused on an American Thanksgiving tradition, Black Friday, and its more recent offspring, Cyber Monday. Here with the Good Word is PropG Media Analyst Ed Elson. Ed, talk to us about Black Friday.

• 2:01Ed Elson?

  The tradition of Black Friday discounts began in the 1970s as retailers tried to attract shoppers flush with holiday present budgets. It started as sales on Friday, then stores started opening at midnight on Thursday, and finally, special openings on the afternoon of Thanksgiving itself. It's even made it across to the UK where stores have Black Friday sales even though Thanksgiving is obviously not a UK holiday. Scott, you're about the same age as Black Friday. What was holiday shopping experience like when you were a kid?

• 2:34Scott Galloway?

  I'm about the same age as Black Friday? I wasn't expecting that. So I can't stand the holidays. I don't like the consumer part of it. I think that's a holdover from my privileged yet vastly underprivileged life. I remember as a kid, like at the age of eight, going out one day and seeing all these new toys. And my friends told me about, you know, Christmas. My parents, we didn't have Christmas. And I know that sounds very sad. And I said, what's, you know, what's going on here? Everyone's got toys but me. And so they started doing stuff. The next year, my parents got divorced and Christmas was mostly about the opportunity for them to send vile messages via me to each other. But my mom, we were economically strained and my mom is smart.

• 3:18Scott Galloway?

  And she said, okay, this is what you're going to do. On Christmas Day, you're going to go to your friends' houses and make a list of what you want. And then she said on December the 26th, we're going to go to the stores or I'm going to go to the stores and buy all this stuff on sale and then we're going to have Christmas on December the 27th. And it was just weird. It was just weird, but I'm sure she was able to buy stuff on sale. And the thing about the retail ecosystem back then was literally the day after Christmas, everything was 30 to 50% off. But it did feel a little unnatural. It felt like you were being smart, but sort of in a dystopian way. You know, the bottom line is I fucking hate the holidays. I hate everything about them.

• 4:00Speaker 03

  Every Who down in Whoville liked Christmas a lot, but the Grinch, who lived just north of Whoville, did not.

• 4:11Ed Elson?

  To get the retailer's perspective, why do they promote Black Friday and Cyber Monday? Prof G Media's editor in chief, Jason Stavas, spoke with Katherine Cullen, the senior director of industry and consumer insights for the National Retail Federation.

• 4:27Speaker 04

  So the subject of our show today is Black Friday, but I'd like to start with a somewhat broader question, which is just generally, why do retailers have sales at all?

• 4:37Speaker 05

  A sale can perform a number of functions. It can be a way to clear out excess inventory, but it can also be a way to attract shoppers, to get them either in your store or on your site, to maybe attract a consumer that you haven't, who hasn't been with you before, as well as if it's a special access type of sale, reward the loyalty of your best customers. So a sale, there's no single function that it performs, but it can be used in a variety of different ways. Since the Great Recession, there has been this impulse on the part of consumers for deal hunting. And so a sale can also be a little bit

• 5:21Speaker 05

  of an entertainment function for consumers. It can be a bit of an experience in sort of finding that perfect item at that perfect price.

• 5:31Speaker 04

  So how has the day after Thanksgiving become such a tremendously important part of our retail landscape and such a big sale day?

• 5:41Speaker 05

  For consumers, there's something, in retailers, there's something very memorable, something very nostalgic about Black Friday. It's a time when people expect to see really great deals on top gift items, whether that's toys or electronics. And it's also a tradition, an American tradition in a lot of ways that I think has retained its popularity for consumers. And that's why we continue to see so much focus on it, even if Black Friday is sort of taking place as early as October now.

• 6:16Speaker 04

  One of the things that you sometimes hear, and this feels like it got added on after the fact, is that this is the weekend that retailers make it into the black. It's when they start turning a profit for the year. Do you think that has much truth to it? And then just more generally, how important is this sales weekend for the financial results of major retailers?

• 6:36Speaker 05

  In the sense that it makes or breaks a retailer's holiday season, I think a lot of pressure has been taken away from Black Friday as a standalone or Thanksgiving weekend as a standalone event. Uh, we've really seen consumers shift their behavior. So consumers, whether it was because of the supply chain challenges or inflation, uh, right now, they want to start their shopping earlier. Um, this has been a trend that's been going on for the last decade, but is really accelerated in the last couple of years. They spent a lot of money during the holidays. They want to spread out that budget. So as sales have gotten spread out, um, you know, that takes some of the pressure away from that single weekend. That said, the months of November and December,

• 7:21Speaker 05

  if we look at those as a whole, are some of the most important, uh, months of the year for retailers. And in many senses is where they can generate a, a large portion of their, of their profits and their revenue. Um, you know, and just to mention here, you know, we are expecting that overall retail sales during, uh, the last two months of the year are going to grow somewhere between six and eight percent on top of last year's record growth. So it is still a very important time of the year, but the pressure on that single weekend has kind of gone down.

• 7:55Speaker 04

  Uh, you mentioned the pandemic. Uh, obviously the pandemic had dramatic effects in the short term on how we shopped and what we bought and that sort of thing. Do you see it having an impact more structurally and over the long term on this Thanksgiving holiday shopping weekend and the nature of these sales?

• 8:13Speaker 05

  You know, we talked a lot during the pandemic about, one of the things that was fueling retail shopping was the shift from services to goods. So you weren't taking those vacations. You were sitting at home. You were outfitting your home office. Uh, you were taking that money, you were spending, you know, dining out and, um, spending it on retail. And there was a lot of expectation that, you know, as things opened up, we would see that swing back to services. And it certainly, we are seeing, you know, people traveling a lot more. People dining out, but it does seem that some of these habits that we, you know, adopted during the pandemic have have kind of stayed. So for example, you know, people discovered that they enjoyed cooking at home.

• 8:58Speaker 05

  All those pots you invested in during the pandemic and those sourdough starters, uh, people, it seems like are continuing to to do that. So we we may not see, at least in the near term, that full shift back to services. It it seems that we've changed our lifestyle enough that uh, some of this spending is going to continue to stay in in goods.

• 9:17Speaker 04

  We like our things, I guess.

• 9:19Speaker 05

  We do like our things.

• 9:21Speaker 04

  All right. Well, Catherine, thank you so much. I really appreciate the time.

• 9:24Speaker 05

  Absolutely. Great. Thank you, guys, for reaching out. It was great to chat with you all.

• 9:27Ed Elson?

  That's the industry's latest thinking on Black Friday. But none of this happens without the consumer. So for the shopper's eye view, here's Mia on the street.

• 9:36Speaker 06

  Do you do Black Friday or Cyber Monday shopping?

• 9:39Speaker 07

  I've been forced to. I've I've gone to malls where people act like idiots and push each other. I used to go purely for the spectacle of watching hundreds, if not thousands and tens of thousands of people in the local mall arguing over deals.

• 9:54Speaker 08

  I've heard that the mall experience is very bad

• 9:58Speaker 08

  during those days.

• 10:00Speaker 06

  You were right.

• 10:01Speaker 08

  So I I might I might do um, like, deals online.

• 10:05Speaker 09

  I worked one year in retail, and that was the worst thing I've ever experienced in my entire life.

• 10:11Speaker 06

  How did you have people like climbing all over you to get deals?

• 10:14Speaker 09

  Yes.

• 10:15Speaker 06

  Did you ever get any good deals?

• 10:16Speaker 07

  Nothing that made it worth it.

• 10:18Speaker 09

  Although this year my TV died, so that's gonna be the one thing that I do for Black Friday.

• 10:26Speaker 08

  I would not go to the mall. I'll do the mall. I'll do the mall.

• 10:31Ed Elson?

  We'll be right back after a quick break with Scott's thoughts on the future of Black Friday and our consumer culture.

• 10:39Scott Galloway?

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• 13:08Ed Elson?

  We're back with Prof G Markets. Black Friday has evolved over the past 50 years, but it remains a durable American retail tradition. With inflation starting to tighten budgets, interest in discount shopping is up significantly this year. 58% of holiday shoppers say that sales and promotions are more important to them when shopping for gifts and other holiday items this year compared with last year. This is up significantly from 48% in September 2021. So, sales and discounts remain popular, but Scott, is there an alternative approach here?

• 13:41Scott Galloway?

  People understand what a sale is, but try and go deeper, and that is what's the real value? And what a sale is saying is that there is scarcity value, and that is this product at this price doesn't last very long. And a sale is meant to create a sense of urgency, ultimately driven by a sense of scarcity. And I would argue that the term sale has become less effective as a means of establishing that scarcity. Now, what do we mean by that? The new sale, if you will, is everyday low pricing, and that is Costco, the most successful retailers in the world, Costco, Walmart, to a lesser extent, Target, have established this notion that they're kind of on sale every day, that you can trust them, that

• 14:24Scott Galloway?

  you're getting a certain amount of price certainty, so they don't need to have sales. As a matter of fact, I think some of the better malls in America, and all the shitty malls have basically gone away, so the higher end malls, I believe, actually prohibit retailers from putting the term sale in their windows. So, there's new forms of creating that sense of scarcity. At the low end, you have a constant sense that everything's on sale. And then at the higher end, what I've noticed is some of the higher end stores have stuck with their pandemic distancing strategies, where they only let in a limited number of people into the store, and lines form outside of the store, because what happens when you see a line? You immediately stop and go, what are they lining up for?

• 15:05Scott Galloway?

  And whatever they're lining up for, the wisdom of crowds means I want it. So I believe that Chanel, for example, is purposely constricting traffic into their stores, even though they don't need to socially distance any longer, to create the ultimate branded vehicle and sense of scarcity. And that is a line outside of their store. That is the new sale, the sense of scarcity, if you will.

• 15:29Ed Elson?

  As Catherine pointed out, sales are more than just discounts. They can be nostalgic traditions and they can be a form of entertainment. Ironically, lower prices can mean people spend more money. And the rising popularity of buy now, pay later is making it even easier to spend money we don't have. Scott, do you worry that easy credit and more sophisticated marketing strategies will get American consumers in trouble?

• 15:54Scott Galloway?

  Uh, yeah, I do worry about it. I think a lot about the algebra of wealth and how you get wealthy. And one of those, a key pillar of getting wealthier is to be a bit of a stoic. And that is to try not fall into this consumer culture, which is, in my view, weird. And feel that a holiday is to go buy shit. I mean, use these sales and these events strategically and as weapons. And if you need a new espresso maker or you're looking for a jacket, fine, take advantage of the lower cost, but don't fall into the notion that it's going to make you happy. There's a lot of studies on happiness that show that we overestimate the happiness things will give us. And also, the amount of stress you're going to place on yourself when you use credit or debt to buy things is just generally not worth it.

• 16:39Scott Galloway?

  The only time in my view, you want to go into debt is occasionally for maybe educational purposes or investing in yourself, or to buy a house or an asset that you think has, on a risk adjusted basis, going to go up in value. Over 10 years, your house almost always goes up in value. Uh, but using debt or buy now, pay later, which I think is mendacious and terrible, or even getting out over your skis on credit is just a way to become, the stress and anxiety you're going to feel from owing money is going to be much greater than the short term DOPA hit of buying shit. And I find there's a certain joy to living in a fairly non-cluttered lifestyle. And that is buy a few things that you like to choose for a long time. Be strategic about the things you buy, but find DOPA elsewhere.

• 17:22Scott Galloway?

  Find it in the gym, find it through relationships, uh, find it through.

• 17:29Scott Galloway?

  Professional achievement. And I love making and spending money, but my advice to anyone under the age of forty or forty-five before you're economically secure is that stuff in this consumer culture is not your friend.

• 17:43Ed Elson?

  Do you think regulation has a role to play in those sort of psychological effects of buy now, pay later and discounts and sales? You know, they psychologically make us want to spend more and like we've said, it's almost tricking us. Do you think humans need guardrails and is it regulators' responsibility to put those guardrails in place or is that infantilizing us?

• 18:07Scott Galloway?

  I think the answer is yes. Look, I think buy now, pay later is basically just a big marketing head fake. This notion that, oh, you're not buying stuff on credit, you're being an innovator by doing BNPL. What bullshit. What bullshit. You're buying shit you can't afford. And but the question is, should there be regulation? I think there should be transparency. I think that there should be education. I think they should be forced to say that whatever was twenty-five or fifty percent of late payments in California last quarter were on BNPL. I think we should have more literacy, financial literacy. My kid can do calculus, but he doesn't understand. We got him a credit card. He can barely understand the notion of interest rates. I think we need a lot more financial literacy in in high school. I think we should have effective limits on interest rates so they don't become eustace

• 18:52Scott Galloway?

  and prey on people who don't have those skills. But my colleague asked about the motor and says the best regulation are life lessons. And I feel like a lot of these young people that engaged in BNPL and for some reason were under the illusion that it was innovative or they were doing something that somehow wouldn't require them to pay it back the way they need to pay back a credit card. It's just stupid, a lot of pain. I don't I don't get it. I I kind of resent these companies and their founders' willingness to pretend or try and create a sleight of hand that somehow this was part of the innovation economy.

• 19:24Ed Elson?

  Thanks, Scott. Let's take a look at the week ahead. We'll see November's unemployment rates. Last month was a particularly tough one for employees in the tech industry with mass layoffs at Twitter, Meta, Amazon and a bunch of others. Scott, I usually ask you for a prediction at this point in the show, but today, do you have any words of wisdom for people who lost their jobs as we head into the holiday season?

• 19:45Scott Galloway?

  So, look, there's going to be a lot of layoffs in big tech and it'll be more spectacle than significant. It's a great employer, but in terms of absolute numbers, it's not a huge employer. But there's going to be a lot of people who grew up in an economy where there were never layoffs, who are going to be laid off. And I think enduring this type of rejection is key to success. And so if you're laid off in the information economy, let's look at the reality of the situation. One, it likely means you're educated, if not really well-educated, maybe even graduated from an elite university. Two, it usually means you live in a Western economy that is doing really well and you live under a democracy. Three, it means you're incredibly skilled. Most of these layoffs that are happening in big tech companies, guess what?

• 20:28Scott Galloway?

  We have no interest in speaking to someone who used to work for Amazon, said no company ever. You're coming out in a strong labor market with incredible skills. You know, boss, weakest or smallest violins ever. And if you do get laid off, if you do get laid off, the only thing I know will happen in your life is that you will face tragedy and disappointment. You will get laid off, someone not as talented as you will make more money or get promoted over you. Worst of all, and all of this will seem trivial, someone you love a great deal and who loves you immensely will get sick and die. Life is an adventure in apologies, in joy, but also in tragedy.

• 21:10Scott Galloway?

  And being laid off is not the biggest one you will face. What the key to success is, in my view, is resilience. And that is having the ability to mourn and move on. And the advice here is the same. If a relationship ends, if you lose somebody you love, if you get fired, give yourself time to mourn. There's nothing wrong with being depressed. And then move on. Put a statute of limitations on it. You lose somebody you love, you got a couple of months, and then if you're not doing well, reach out to someone for help. You get fired, realize it's likely not your fault. It's likely not your fault and do whatever you need to do. Whether it's having the right people around you, whether it's repeating to yourself all

• 21:53Scott Galloway?

  the outstanding qualities you have to convince yourself that one, you are the solution to a firm's problems. Two, you can make someone else's life wonderful and that you have value. The difference between success and happiness is not a function of how awesome you are or how hard you work. It's a function of recognizing that a lot of your success and a lot of your failure is not your fault. Get up, dust up, get to the plate and swing harder. This isn't about you. This is about a structural shift in the economy and guess what? You're going to be just fine. And at the end of your life, what you will be most upset about is not that you were laid off, but how upset you were about it.

• 22:38Scott Galloway?

  You are going to be fine. That's all for this episode. Our producers are Claire Miller and Jason Stavers. Special thanks to Catherine Dillon, Ed Elson, Mia Silverio and the Prop G Media team. If you like what you heard, please follow, download and subscribe. Thank you for listening to Prop G Markets from the Vox Media Podcast Network. We will catch you next week.

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