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Did Staples Inc. Just Start Something Big for Christmas?

By Rich Duprey - Oct 17, 2015 at 9:04AM

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Staples is going to stay closed on Thanksgiving Day this year.

It was a bit of a jaw-dropper that Staples decided to buck the holiday shopping trend and stay closed on Thanksgiving Day.

Wal-Mart won the prize this year -- or the most catcalls -- for hyping its Christmas sales the earliest, launching its holiday layaway program on Aug. 28. But office supplies retailer Staples ( SPLS ) is doing something even more unique than stretching holiday creep to its limits, and it may become the start of a new trend.

Everyday is Christmas
According to the National Retail Federation, the two-month extravaganza of November and December will see retailers net a "solid" 3.7% increase in spending this year, or $630.5 billion. But that's down from the 4.1% increase seen in 2014 as the still-sluggish economy has consumers spending more cautiously.

While numerous retailers are planning to once again open their doors on Thanksgiving Day to juice sales out of the traditional start of the holiday shopping season, Staples is going in the other direction and will be staying closed this year.

There have always been retailers like Nordstrom, Home Depot, and Costco that bucked the trend and didn't open up, but just as there was a pell-mell rush to open up on the holiday in 2013 when there were six fewer shopping days to the season due to a quirk in the calendar, perhaps the office supplies retailer will be in the vanguard of a trend that sees stores close their doors once more.

For the past two years, Staples opened on Thanksgiving to compete for a slice of holiday sales, but earlier this month it announced that 2015 will be different as it will stay closed on the holiday. Consumers can still shop its online store and they'll be opening up at 6:00 a.m. on Black Friday, but employees can stay home for Thanksgiving.

Ebenezer Scrooge is in charge
Despite all the hype thrown into stores that opened up on the holiday -- or those like J.C. Penney that last year opened even earlier than they had the year before (or, like RadioShack, first said they weren't going to open then desperately decided, yes, they were) -- the move apparently did nothing to help them.

The NRF in late November 2014 was estimating that the five-day holiday shopping period between Thanksgiving and Cyber Monday had actually seen sales fall 11% to $50.9 billion. And by trying to one-up the competition with ever-deeper discounts, the promotional atmosphere undercut their bottom line.

Staples certainly didn't benefit. Its fourth-quarter retail sales last year fell 7% as comparable-store sales dropped 4% and operating profits plunged 23% from the prior period.

Worse for the retailers, all the heavy discounting has conditioned consumers to expect, even demand, low prices. They've come to expect the deep price cuts and are downright miserly until they get a super deal.

It's a corner they've painted themselves into, meaning they may follow the office supplies company out of the conundrum for no other reason than self-preservation. They haven't been able to increase sales by starting the holiday season earlier -- they've just stretched them out over a longer period of time.

A rock and a hard place
Of course, they're also caught in a tough spot. If a competitor moves to offer sales earlier and it doesn't, then the retailer will lose out, so it finds it necessary to match what its rivals are doing just to tread water.

But perhaps more critically, the advent of online shopping has changed the dynamic of how shoppers shop. Consumers no longer have to wait until a bricks-and-mortar store decides to open or have a sale. They can shop when and where they want online. Indeed, the retail industry's advocate says it's anticipating e-commerce holiday sales to jump 6% to 8% this year to $105 billion. That represents an almost 17% piece of total forecast sales.

Which is why Staples is smart to close on Thanksgiving but highlight the availability of its online store. It's already one of the biggest Internet resellers in the world and its website is the second-biggest behind Amazon.com in terms of the number of SKUs offered.

Other retailers also might begin to realize just how cost-effective it is to close their doors on Thanksgiving, regardless of what the competition is doing, and also migrate their sales to their e-commerce sites. That will create a new set of challenges for retailers, but their customers are already moving there, so retailers may just as well follow Staples' lead and meet them there.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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