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More Like Gray Friday

Wed, 01 Dec 2010

Does the annual US tradition of Black Friday actually provide an economic boost or is it nothing more than a marketing scheme?

Every fourth Thursday of November, Americans sit around the dinner table with family and friends as they give thanks. Thanks for good health, thanks for their holiday company, thanks for the long weekend and a general thanks for virtually everything imaginable. Turkey, mashed potatoes, cranberry sauce and corn fill their plates and whether or not the room for it was saved, pumpkin pie for dessert is a prerequisite for any traditional meal. As with every tradition, those associated with this holiday have also adapted throughout the decades. Once the time for merry over-eating in the comforts of home, Thanksgiving is more often becoming a preparation for the looming start of a marathon. As any runner will verify, carb-loading is crucial before a big race and for the American consumer no race is bigger than the start of the Christmas shopping season directly after Thanksgiving dinner. The Friday immediately after has thus served as the start line for decades.

Kicking off the 28 days of gift purchasing, Black Friday as it came to be called, has often served as a forecast token. It gave retailers an indicator of how active shoppers will be and just how much they are willing to spend. In a country where last minute purchasing flourishes, the Black Friday revenues are consistently viewed as a safe bet. Even if they only ballpark figures or classify them as good or bad, the statistics emerging from the day after Thanksgiving can reassure or terrify the anxious retailers. To ensure high traffic, shops from the local to the international offer discounts, deals and gifts to lure in customers, whether these work or not is still questionable and statistical data provides few clear answers.

Department stores, chain retailers and electronics suppliers are particularly known for their 'big deals'. Often opening their doors at the crack of dawn, or even earlier, in 2010 even many large-scale shopping malls opted for letting the crowd in as early as three in the morning. The middle of the night for many, the dedicated shoppers and bargain hunters lined up even earlier, eager to get their hands on the highly advertised Black Friday discounts. These sales can get the attention of potential customers, but they also carry the potential of skewing incoming data related to the actual success in targeting consumers.

In 2010, 9 out of 10 American retailers offered a Black Friday special. In some cases this was a discount on everything in the store, as was the case for Neiman Marcus, in more middle market retailers like Gap, signature items were offered at lower than low prices. The approach of each was catered to the clientele that they tend to attract. From bargain hunters to browsers, the diverse consumer groups affect the end figures and can even skew the perceptions when only looking at traffic and not actual sales.

According to ShopperTrak, specialists in traffic management solutions, traffic to stores rose by 2.2% compared to Black Friday last year. This, however, only translated to an increase of 0.3% in sales. The reasons behind the low numbers could be as simple as more will to shop among consumers but a consistently present reluctance to overspend as they monitor their bank accounts and credit lines more carefully.

The largely insignificant increase reported by ShopperTrak is counteracted by the National Retail Federation. Initially the organisation estimated that 138 million people would shop during the holiday weekend, yet at its close 212 million individual shoppers actually made it to the stores. This constituted a rise of 8.7% in traffic over 2009. The spike was also noted for sales as they reached $45 billion, compared to 41.2% the previous year. Unlike ShopperTrak, the National Retail Federation suggested that consumers are more willing to buy and discount purchases were made on a lower scale in 2010. Although this figure was only 2% below that of last year, it still encouraged the idea behind Black Friday - for retailers to move into the black, in other words make a profit.

Presumably not explaining the difference in traffic data, the divergence between ShopperTrak and the National Retail Federation in terms of revenue could be attributable to Cyber Monday. The newest ploy to spend during the holidays emerged five years ago as a strategy to ensure consumers would continue buying even after Thanksgiving weekend. It is characterised by the same types of deals as Black Friday but occurs only on the internet. Because most American retailers already have fully functioning online shopping, it increases their income throughout the year and particularly in the crucial days before Christmas. This year alone, US online sales rose by 33% on Thanksgiving, indicating that the scheme is working to the benefit of large retailers.

Whether shoppers are actually getting outlandish deals on the things they want or are sneakily coerced into buying things they think are highly discounted is debatable. The multiple shopping bags placed in car trunks on Saturday morning indicate that they are not overly concerned and are at least under the impression that the experience was a fruitful one. Likewise, retailers are hopeful and remain optimistic about the potential Thanksgiving weekend carries for the remainder of the season, or at least large retailers are. In the pre-Christmas shopping binge the only group that may be disadvantaged is small retailers who neither have internet presence nor the possibility to offer deep discounts. When consumers do not choose them, they inevitably experience losses, losses that are likely to continue much past Thanksgiving weekend.

by Magdalena Kalata

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