Monday, November 26, 2012

Could Retailers Begin Declining to Participate in the Black Friday Frenzy?



Today is Cyber Monday when workers who have been off for the four day Thanksgiving Holiday return to the office and continue their post-Thanksgiving shopping online using their office computers.

This is assuming they have any money left to continue shopping following the Black Friday shopping frenzy that retailers began on Thanksgiving afternoon and have continued through the weekend.

Is it possible that Black Friday could be losing it appeal to retailers?

Black Friday, of course, is the day following Thanksgiving that, for stores and shoppers, has assumed holiday status itself.   For many shoppers Black Friday almost eclipses the real holiday, Christmas, for which it is associated.  And, for sellers, Black Friday sales can mean the difference between a profitable Christmas Season or a not so profitable Christmas Season.

Normally black is associated with things that are bad or even evil.   Blackmail, black markets, black ops, black arts, etc. all conjure up images of crime or other anti-social behavior.

However, for one profession, accounting, black is good given that accountants have traditionally recorded profits with common black ink while making losses stand out by recording them using red ink.  

As Christmas and the tradition of extensive gift giving began becoming more popular beginning in the late nineteenth century, retailers began to see profits rise during the Christmas Season as shoppers began opening their wallets wider and spending more lavishly  on gifts for family and friends.

Occurring about a month before Christmas, Thanksgiving began to be looked upon as the day before the start of the Christmas shopping season.  This image was helped by the fact that, because Thanksgiving always fell on a Thursday, it didn’t make sense for most factories to re-open for just one day, Friday, and then shut down again for the weekend. 

Thanksgiving thus became the start of a four day holiday weekend and the day after Thanksgiving, Friday, became the start of the Christmas shopping season.

Thanksgiving, of course, brought families together for a day of feasting and fun and, being close to Christmas, got their minds on that big holiday get together that was only a few weeks away.  This was just the frame of mind people needed to get started right away on Friday, the day after Thanksgiving, with their Christmas shopping.  

Retailers, of course, saw this and began fanning the flames of the Christmas shopping spirit by offering special deals to lure shoppers out – after all, the sooner people start Christmas shopping the more time retailers have to lure them in.

The competition associated with the free market meant that all stores soon entered the fray with sales and promotions and, as time went on the sales and promotions became increasingly intense and widespread.  

All of this hype, of course, succeeded in firing up the competitive spirits of shoppers causing them to come out en mass and eager to hunt for deals.

The Friday after Thanksgiving soon became such a big shopping day that, for many retailers, the sales volume was such that it tipped the scales from breaking even or even losing money for the year to profit – i.e., the accountants began writing the bottom line numbers with black rather than red, ink.

However, Black Friday may be approaching the point where the shopping frenzy associated with it reaches a tipping point where store hours, shoppers and sales all begin to decline.

Shoppers in increasing numbers may be tireing of this and begin declining to join the Black Friday frenzy and, instead, enjoy their Thanksgiving while choosing to  spend the next day relaxing with their families.

More important, many businesses will begin finding that the ever increasing price reductions needed to lure consumers on Black Friday combined with the increasing costs associated with opening earlier and staying open with extra sales personnel result in losses rather than profits.

Results from last year indicate that, rather than getting the Christmas shopping season off to a strong and sustained start that added to sales and revenues, Black Friday tended to be a buying surge followed by a significant drop off in selling the following weeks.

Overall sales were as expected and in line with previous years but rather than being spread out over the weeks between Thanksgiving and Christmas, were concentrated on Black Friday.  

The problem with this for retailers is that while total sales are good in terms of merchandise sold, revenue is down due to price cutting and costs up due to extra costs of added staff and hours on Black Friday. 

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