Black Friday used to mark the beginning of the most intense period of holiday shopping of the year, with millions of Americans hitting the stores on the Friday after Thanksgiving to take advantage of sales and special deals offered by retailers. Although the phrase "Black Friday" originally referred to a horrific day for the stock market in the 1860s, it was applied to the day after Thanksgiving in Philadelphia in the 1960s in response to the traffic and congestion and has been in common use since the 1970s. It is often asserted that Black Friday is the time when many retailers begin to show a profit or "go into the black" for the year, but that is merely a myth that has no basis in reality.
Black Friday remains the busiest shopping day of the year, followed by "Super Saturday" and the Sunday before Christmas. However, Black Friday is on the wane, with the emergence of online shopping and ever earlier sales at brick and mortar stores diluting the importance of what was once far and away the most important day for most retailers.
During normal economic times, about 70 percent of US business activity is driven by consumer spending. The volume of retail sales is, thus, a closely monitored statistic and indicator of overall business activity. In addition, the holiday season is an opportunity for part-time work, with more than 700,000 seasonal positions filled in a typical year. Of course, retail sales also support additional jobs in industries ranging from transportation to manufacturing.
This year, is looks like the holiday season will be merry and bright for retailers. The National Retail Federation (NRF) is projecting that holiday sales will rise by 3.7 percent to reach $630.5 billion. Last year’s actual holiday sales were up 4.1 percent, which was a notable improvement over the 2.7 percent gains in both 2013 and 2012. Holiday shoppers in 2014 spent an average of $802 on gifts, decorations, food and more, with about half of that amount occurring during the Thanksgiving weekend.
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According to NRF’s Preliminary Thanksgiving Weekend Survey, an estimated 135.8 million shoppers (nearly 59 percent) definitely will or may shop on Thanksgiving, Black Friday, Small Business Saturday and/or Sunday. This is down slightly from 2014’s 61 percent who planned to shop and 55 percent who actually did so.
There are many reasons for the downward Thanksgiving weekend trend. Part of what is going on is a shift to Cyber Monday. About 90 percent of Americans use the Internet, whether at work, home, or on a smart phone or tablet. Just 15 years ago, only half were online, which was a dramatic rise from the mere 14 percent using the Internet 20 years ago (according to research by the Pew Research Center). Naturally, online shopping has grown apace. Retailers offer special online sales, targeted emails, free shipping, loyalty discounts, and many other enticements to shoppers. The convenience is hard to beat, and Americans are expected to spend $105 billion online this year according to NRF, which would be an increase of more than 6 percent. Cyber Monday is now morphing into Cyber Weekend, as the rise of personal devices has meant that people no longer have to get back to the office to do their shopping (which may help productivity, but that’s another story).
People are also shopping earlier. Nearly 60 percent of holiday shoppers had already started checking off their shopping lists by November 10, according to the NRF. Many are trying to spread spending over several months, and others are taking advantage of early sales.
If you’re a procrastinator or are still wondering what to purchase, it may interest you to know that for eight years in a row, NRF’s holiday surveys have found gift cards to be the most requested gift item. Not surprisingly, total spending on gift cards has increased 28 percent since 2006. With a wide variety of retail, restaurant, and other cards available at thousands of grocery stores checkout stands and similar high-traffic areas, it’s never been easier to go the gift card route.
Thanksgiving weekend will always be an important shopping time, even though the effect of Black Friday has been diluted to some extent. Maybe it’s time for a new name. I’ve seen "Black November" tossed around as one possibility. Whatever we call it, one thing is clear: a good holiday season for retailers is good news for the economy and gift recipients everywhere.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.