Black Friday sales were weak, but that doesn’t mean the economy is
For decades, Black Friday was vital because it marked the start of the most lucrative season for retailers. By conventional wisdom, then, sales numbers for Black Friday were a crucial indicator for the success of the rest of the holiday season.
Happily for the economy, shifts in consumer behavior, and the ways that retailers are adapting to them, mean that’s not really the case anymore.
At first blush, this past Black Friday weekend was a disappointment. In-store shoppers on Thursday, Friday, Saturday and Sunday combined to spend a projected $20.4 billion – a 10.4 percent drop from the same time in 2014, according to finalized figures released Tuesday by ShopperTrak, a consumer analytics firm. About 102 million people reported shopping at bricks-and-mortar stores over the weekend, according to the National Retail Federation (NRF).
There were a few logistical quirks that played a part in the decline, experts say. “It’s important to view the decrease in context,” said ShopperTrak founder Kevin Martin in an e-mailed release. “There are several contributing factors, including fewer available store hours on Thanksgiving Day and a later Hanukah that is anticipated to push sales into December.”
Another thing: Fewer people got paid right before Thanksgiving this year. “On the week of Black Friday, there were 20 million fewer paychecks issued than last year and pushed into next week,” says IHS Global Insight economist Chris Christopher, whose firm has tracked payrolls over the past three Thanksgiving weeks. “Even though the economy has improved, we have a lot of people still living paycheck. But when they get paid they will go out and spend.”
Additionally, retailers have been spreading out their best discounts more, pushing pre-Black Friday and Thanksgiving sales to attract shoppers’ attention before their competitors. Mr. Christopher notes that the “discount creep,” too, was aided a bit by inventory concerns, with retailers selling less winter clothing than in late October and early November than they had in previous years because of relatively warm fall weather across much of the United States.
But beyond those mitigating factors, consumer (and retailer) habits are changing in a way that could make the singular impact of previous Black Friday holidays a thing of the past. For one, it’s moving online: for the first time this year, there were more Black Friday shoppers online than there were in stores (103 million people reported shopping online, compared with 102 million in-store, according to the NRF). Cyber Monday, on Nov. 30, was the biggest yet, raking in a record $3 billion in sales according to a preliminary survey from Adobe. The firm also reported that an estimated $8.3 billion was spent online between Thursday and Sunday of last week, a 17 percent increase from 2014.
Bricks-and-mortar stores are still adjusting, offering up more discounts on their websites and offering perks like in-store pickup. The transition hasn’t always been smooth: Yesterday, Target’s website buckled briefly under the weight of Cyber Monday traffic. But even Cyber Monday comes after weeks of primer sales, with Amazon, Gap, and more now releasing some of their best sales throughout the month.
This makes it harder to judge Black Friday itself as a harbinger of things to come. IHS Global Insights estimates that holiday sales through November and December will increase 3.5 percent over a year ago, aided by a stronger dollar, low inflation, and the lack of a major event to take the wind out of consumer spending, like Hurricane Sandy in 2012 or the government shutdown in 2013. Additionally, the biggest shopping days of the year are still to come. Last year, last-minute shoppers made Christmas Eve the busiest spending day, with Dec. 23rd a close second. Some are suggesting that physical stores should focus their promotional efforts on those days, when, despite Amazon’s best efforts, it’s still too late to shop online.
This all means that despite its reputation, Black Friday simply isn’t the most important shopping day of the year, on multiple levels. “It’s not a good bellwether for the overall season anymore,” Christopher says.
