Black Friday, Cyber Monday and the $16 Trillion Problem
Black Friday is known as the first big shopping day after Thanksgiving for the Christmas holiday season. It is called Black Friday because it has been said that retailers operate in the “red” all year until the first big shopping day, which is traditionally the day after Thanksgiving. That’s the point when retailers go in the black and start to make profits.
This year it was reported that, although foot traffic at the malls was up 3.5 percent over last year, total sales actually fell a marginal 1.8 percent. This dip in Black Friday sales could account for stores opening their doors this year on Thanksgiving Day to encourage shoppers, thereby taking away sales from the big day. For example, Walmart generated almost 10 million transactions from 8pm to midnight on Thursday. Total sales on Black Friday 2012 were $11.2 billion, while sales reported for 2011 were $11.4 billion.
Is Black Friday becoming an event of class division?
According to Forbes, Black Friday shoppers are now divided in two distinct groups: the young, and the economically desperate. If you have ever been to a Black Friday event at any big box store, then you know what it can be like. I discovered this last year when, although I would have liked to have gotten some great deals, I couldn’t tell what they were because of wall-to-wall people yelling and shoving. Shopping on Black Friday, I concluded, was just not my cup of tea.
Also in the same Forbes article, African-Americans who lost twice as much household income as whites during the Great Recession were most likely to say they would be shopping at a Black Friday event compared to whites. For those who are not cost conscious, or in the age group of 18 to 29, we may prefer to do our shopping online.
Cyber Monday , first introduced in 2005, is known as the biggest shopping day online after Thanksgiving. Many find the idea of standing in line at the mall or at a store on Thanksgiving Day to shop as disrespectful. Online shopping on Thursday, though, has increased more than 20 percent from last year. The National Retail Federation estimated that more 35 million Americans visited websites for online shopping on Thursday, up 29 million from last year.
During the weekend, I noticed many online retailers were offering free shipping and 30 percent or more in discounts. I would much rather shop in front of my computer in peace and quiet than amidst the insanity of a Black Friday Event at Walmart. For those who like Black Friday events, enjoy the bumps and bruises. That is what is great about America — we have the freedom to choose, as it should be.
Daniel Gross also says in his article that only looking at Black Friday sales does not take in the bigger picture. Consumer confidence is up, and though I would beg to differ, 2 million jobs created in the last 12 months does not make up for the millions of Americans still out of work or underemployed. He left out an important fact that almost 47 million Americans are on food stamps since June of this year. However, I do agree with his point that, overall, the dynamics of holiday shopping and Black Friday have changed because of access to online shopping.
In addition, brick and mortar retailers will come up with creative solutions to bring customers in to their stores. One example is Sear’s offering a designer fragrance collection called Vivabox, which contains a coupon that can be redeemed only at a Sear’s store and not online. Many retailers are on to this trend and offer “deals” purchased in store that are not offered on their websites.
While we discuss all of the holiday spending, however, let’s remember — the nation’s debt is $16 trillion and counting.
By comparison, $11+ billion seems a paltry sum, even if it is one day of spending. The irony, as American economist, Peter Schiff points out, is that we can’t spend our way out of debt. We are buying products on Black Friday that the U.S. does not produce. Schiff says that maybe Americans should be saving their money instead.
A consumer spending driven economy doesn’t allow for saving money. In fact, banks offer such a low-interest rate, there is not much incentive for Americans to save their money. What discretionary income Americans have, they most likely will spend on Black Friday, Cyber Monday or throughout the coming weeks.
- Black Friday surpasses $1 billion in online sales (computerworld.com)
- Holiday Shopping: Black Friday, Cyber Monday Summary (dailyfinance.com)
- Cyber Monday: not biggest or best deals (sfgate.com)
- Black Friday Results Are In: The Centerpiece of a Huge Multi-Day ‘Bricks-and-Clicks’ Shopping Spree (business.time.com)
- Walmart Cyber Monday Deals: Discounted iPod Touch, Xbox & More (fox2now.com)