Above: Black Friday in downtown Seattle in 2010 (Image by John Henderson, CC BY 2.0)
For the United States economy, fortunes once largely hinged on sales results for the Black Friday weekend. The latest jobs reports and sales figures, however, tell a changing story. These numbers reinforce a perception that Black Friday has begun to lose much of its cultural and economic relevancy as more consumers make their holiday purchases online.
A Tale of Contrasting Numbers
If our economic fate still depended on Black Friday sales, this year’s preliminary survey results from the National Retail Federation (NRF) would have been a strong indicator of a worsening economy. According to the survey, overall sales (in-store and online) dropped by 11 percent, from $57.4 billion last year to $50.9 billion this year. The average in-store amount spent per person on Black Friday is also continuing to decline, as the following graph shows.
But the November jobs report paints a different picture. In fact, the U.S. economy added more than 321,000 jobs, erasing lingering doubts about the strength of recovery.
Also in contrast to the overall Black Friday numbers, Cyber Monday sales increased by 17 percent, establishing a new record for online spending. In all, this year’s Cyber Monday sales generated more than $2 billion in transactions.
Similarly, online purchases on Thanksgiving and Black Friday jumped 32 percent and 26 percent, respectively.
Overall, retail sales for November improved by 0.6 percent year-over-year, a clear indication of an improving economy.
Online Sales and Offline Benefits
The improving numbers bode well for the rest of the holiday shopping season. As many industry analysts have noted, retail sales should continue to exceed projections. The NRF, for example, forecasts a 4.1 percent improvement over last year based on an early start on discounting and a strengthening economy. Moreover, the trade association expects sales to be strong through the holiday, reflecting a tendency by today’s consumer to shop with much greater sophistication and wait for the best deals on the products they want.
“It’s important to remember, however, that despite getting out of the gates quickly, the holiday season is a marathon and not a sprint and we expect retailers to continue to be extremely competitive as they chase after the $616 billion that is on the line this holiday season,” says NRF president and CEO Matthew Shay in a press release. “Shoppers will continue to make retailers work for their gift budgets as they weigh price, value and convenience.”
As a result, consumers start earlier and end later in balancing each of those benefits as holiday shopping continues to evolve. It’s one of the reasons why retailers remain especially optimistic about strong sales throughout the month of December.
It may also be a logical response to the barrage of promotions promising significant discounts as long as consumers respond quickly. Many of these deals fail to match the hype.
In fact, less than one percent of early season promotions result in a bargain, according to Jacqui Cheng, editor in chief of the online product review sites The Wirecutter and The Sweethome. In an interview with The New York Times, she shares that her team has researched more than 54,000 promotions, finding fewer than 300 that appeared to offer substantive discounts.
If savvy consumers are indeed ignoring early promotions and waiting for the best deals, Super Saturday, the last Saturday before Christmas, may become the heaviest shopping day of the season, expected to generate more than $10 billion combined in online and offline sales.
One of Many Different Touch Points
Although Black Friday has lost much of its traditional meaning and it can no longer be relied upon as a barometer of the country’s economic health, it provides critical insights about an economy and a society in transition.
Simply put, digital dynamics have created many more touch points throughout the calendar year to try to influence purchasing decisions, with retailers becoming less dependent specifically on holiday sales to meet their annual revenue goals. And meanwhile, consumers apply the same tools seeking to make the most-informed decisions based on their needs.
So far this holiday season, a convergence of factors, enabled by digital media technologies and improving economic conditions, have resulted in an early-starting holiday shopping season that has posted strong returns.
Black Friday may be dead, and that may be a sign of good things to come.