Tag Archives: Black Friday

Goodbye, Black Friday!

Do you remember the Blue Laws? They were based on Christian religious doctrine, and were designed to prevent any retail business from operating on Sundays. Instead, Sundays were dedicated to attendance at church services and associated religious gatherings.

Prior to Henry Ford’s adoption of the five day work week in 1926, factory workers in sweatshops would work six days a week and then rush to their neighborhood stores (and saloons) to purchase merchandise (and libations) on Saturday evenings. They needed to do so because the establishments would be closed, by law, every Sunday.

Most stores now remain open seven days a week, and many operate 24 hours a day. But despite the abolition of Prohibition (i.e. the criminalization of liquor sales) in the United States during the early 1930s, certain states still outlaw the sale of liquor on Sundays, as well as any sales in supermarkets on any day of the week.

Interestingly, other relics of the Blue Law era have survived as American traditions, if not as legal restrictions. One such policy, though, is quickly coming to an end, and is taking the tradition of Black Friday down with it.

The Thanksgiving Tradition

Thanksgiving Day, for instance, has been viewed as a sacrosanct time for family gatherings since it was established as a national holiday by President Abraham Lincoln during the Civil War. Thanksgiving actually replaced an older holiday called Evacuation Day, celebrated in the northeastern United States on November 25, as the day when the British Army formally withdrew from New York City after their loss of the Colonies in the American Revolution.

It is not illegal to ask employees to work on Thanksgiving, or on other national holidays, in the United States. In fact, retail stores have always remained open on many national holidays throughout the year, such as Veterans Day on November 11. Nevertheless, to respect the tradition of Thanksgiving Day, most retailers have shut down in order to grant their employees time to spend with their families.

The unusual closure, quite conveniently, gave those very stores the opportunity to stage “grand re-openings” on each Friday after Thanksgiving  to kick off the Christmas shopping season. The weeks between Thanksgiving and Christmas were (and continue to be) so lucrative that the stores would willingly lose money during all of the weeks before Thanksgiving in order to gear up for the holiday sales season.

The Friday after Thanksgiving would thus represent the day when most stores “broke into the black” and began reaping profits for the year. And so the term “Black Friday” evolved as a connotation of profits and prosperity in the retail industry.

Now It’s Black Thursday!

During much of the twentieth century, retailers opened for business at their customary times on Black Fridays. But then, in order to beat the competition, many store chains opened earlier and earlier on those mornings. And the “grand opening” specials become more and more extravagant, with many stores offering customers prices on popular products that fell well below their wholesale costs.

Last year, several chains opened during the wee hours of Black Friday morning, well before sunrise. But only this year did two different retail chains actually cross the midnight hour and open for business before midnight on Thursday evening. Toys R Us decided to open at 9:00 pm and Walmart followed at 10:00 pm; Target and others followed by opening precisely at midnight.

Many citizens were aghast at this intrusion on the tradition of Thanksgiving dinner; 200,000 Target employees and other concerned citizens actually signed a public petition to protest their employer’s decision. But most simply considered the shift of Black Friday’s opening times to Thanksgiving evening to be an inevitable reflection of evolving social values.

It’s Always Money

The reason for these shifting values? It’s always a matter of money. And it’s not just a consideration for retail stores and supermarkets; many other industries are witnessing the decline of cultural traditions as well.

The Commonwealth of Massachusetts, for instance, has just passed legislation to legalize large-scale casino gambling projects; New York State is continuing to pursue similar projects too. And the tradition of prohibiting obscenity from broadcast television programming is continually eroding through court decisions and other causes.

Furthermore, although many online retailers promote Cyber Monday (i.e. the Monday after Thanksgiving, a regular business day) as a day of special offers, they all — including such titans as Amazon — routinely remain open in a virtual sense 365 days a year. In other words, they’ve never been constrained by any blue law limitations whatsoever.

With the tradition of special Friday offers now migrating to Thanksgiving Thursday in “real world” stores, and to Cyber Monday in online stores, it is difficult to expect that Black Friday will continue to exist in its historical form. For citizens who actually appreciate the support that such laws give to people of faith and to their family values, the tradition will be sorely missed indeed.

Black Friday: Was It Successful?

Is America a unified society? How often do American citizens come together to celebrate national events?

Britons, for instance, declare their social solidarity by pinning poppies to their lapels on national Remembrance Day. And Canadians all stop and stare at their television sets on national Hockey Night.

We Americans likewise celebrate a variety of national holidays and sporting events. We all eat turkey on Thanksgiving and hot dogs on Independence Day. And we’ve recently added Super Bowl Sunday to New Year’s Eve as a national day of partying, with Halloween quickly emerging as a third such day as well.

Let’s Go Shopping!

But only in America do people enjoy a national day of activity dedicated to retail shopping!  We are referring, of course, to Black Friday. It’s the day after Thanksgiving, a time when stores open as early as 12:01 am to kick off the holiday season with astonishing price bargains.

The name Black Friday sounds a bit gloomy, but it actually reflects a cheerful event on every retailer’s calendar. Namely, on (or around) the day of Thanksgiving each year, retailers generally break out of the red – in other words, they stop losing money because of meager store traffic – and break into the black. In other words, the costs of running retail establishments are so high that stores generally lose money for the first eleven months of each year; they only start to earn profits during the massive influx of customer traffic throughout the holiday season.

Thus, if the holiday buying season is dismally slow, stores end up reporting terrible financial losses for the entire year. And because of today’s treacherous economic environment, retail professionals held their collective breaths and crossed their fingers last week, hoping that consumers would finally open their wallets and splurge a bit on Black Friday.

Volume vs. Money

So what actually happened on Black Friday? And then what happened on Cyber Monday, the day when online shoppers dash to their keyboards and log onto retail sites like Amazon after having visited their shopping malls over the weekend?

Well, the results were a bit mixed. On the one hand, foot traffic in both the real and virtual retail worlds was notably higher than last year. But the average amount spent by each customer was notably lower. Thus, even though total sales revenue (as measured by total dollars spent by all consumers combined) was modestly high than last year, the meager amount spent per consumer was a significant cause for concern.

So how should we interpret these results? Was the increase in foot traffic and the volume of retail activity more important than the amount of money that was spent by each customer? Or were the meager dollars that exchanged hands the more important, and worrisome, consideration?

These are interesting questions, aren’t they? In fact, they reflect critical considerations regarding business strategy. For instance, in the midst of a grinding recession, should a luxury retailer like Tiffany try to convince 4,060 customers to each purchase a $100 set of Mini Round Tag Earrings? Or are they better served by trying to convince a single customer to purchase a $406,000 diamond ring in a setting of pure platinum?

The View From Wall Street

Interestingly, Wall Street investors confront similar questions while assessing the health of the financial markets. We all keep close track of major stock market indices like the Dow Jones Industrial Average and the S&P 500, but we don’t necessarily take the time to understand why such indices rise and fall from day to day.

Fortunately, though, Wall Street analysts perform that task for us. Whenever a market index fluctuates in value, for instance, financial analysts compute the number of stocks within that index that rises or falls during that time. Whenever such a fluctuation is attributable to many stocks that change modestly in value, they say that the market’s rise is broadly based.  But whenever the fluctuation is attributable to a very small number of stocks that soar or sink in value, they say that the market’s rise is narrowly mixed.

So from an economic perspective, which is preferable: a broadly based increase or a narrowly based one? Well, either type of movement is capable of lifting the market, but most analysts tend to prefer broadly based increases in the values of indices. That’s because narrowly based increases are built on meager foundations of small numbers of stocks; when those individual stocks decline (as all stocks inevitably do), the entire market is at risk of collapse.

What is The Verdict?

So with this in mind, what would a Wall Street analyst say about our retail performance on Black Friday? Most would call it a modest but broadly based improvement over last year’s experience, and would consider it a hopeful sign that our economy is slowly on the mend.

Thus, although our retailers may pine for the halcyon days of 2006 when the hot holiday gift was an incredibly expensive Sony Playstation 3 (instead of 2009’s relatively inexpensive Zhu Zhu hamsters), they may be comforted by this indicator that the American economy is moving in a healthy direction.