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Black Friday: What It Means to Economists and to You

Black Friday: What It Means to Economists and to You
Black Friday: What It Means to Economists and to You Black Friday: What It Means to Economists and to You

Black Friday: What It Means to Economists and You

Black Friday follows the American holiday of Thanksgiving, which falls on the fourth Thursday of November. As a day considered to signal the beginning of the Christmas shopping season, it has evolved into a day that offers various discounts and deals exclusive to shopping.

The sales numbers from Black Friday are frequently believed to indicate the country’s general economic health. Additionally, they provide economists with a method to quantify the level of confidence the average American has in spending money on discretionary items. It is commonly believed that weaker sales statistics on Black Friday are a sign that economic development will be slower than expected.

Understanding Black Friday

It’s common for retailers to offer special promotions online and in-store on Black Friday. Many open their doors during the pre-dawn hours on Black Friday to attract customers or keep their operations going well into the night on Thanksgiving. It’s also become increasingly common for retailers to offer “Black Friday” deals well before the actual day.

Avid bargain hunters have been known to camp overnight on Thanksgiving to secure a place in line at a favorite store; the most passionate might skip Thanksgiving dinner altogether and head to whatever stores are open. The promotions usually continue through Sunday, and brick-and-mortar stores and online retailers see a spike in sales.

Black Friday and Retail Spending

Retailers may spend an entire year planning their Black Friday sales. They use the day to unload overstock inventory and offer doorbusters and discounts on seasonal items, such as holiday decorations and typical holiday gifts.

The doorbusters often include big-ticket items like TVs, smart devices, and other electronics, luring customers in the hope that, once inside, they will also purchase higher-margin goods. Black Friday advertisements are often so highly anticipated that retailers go to great lengths to ensure they don’t leak out publicly beforehand.

Competition among consumers for limited supplies of the hottest trending items has sometimes led to violence and injuries in the absence of adequate security. For example, on Black Friday in 1983, customers engaged in scuffles, fistfights, and stampedes in stores across the U.S. to buy Cabbage Patch Kids dolls, that year’s must-have toy, which was also believed to be in short supply.2 Appallingly, a worker at one big-box store was trampled to death on Black Friday in 2008, as crowds of shoppers pushed their way into the store the moment the doors opened.3

The Surprising Origins of Black Friday

The concept of retailers throwing post-Turkey Day sales started long before the name “Black Friday” was coined. To kick off the holiday shopping season and attract shoppers, stores have promoted major deals the day after Thanksgiving for decades, banking on the fact that many businesses gave their employees that Friday off.

So why the name? Some say the day is called Black Friday as an homage to the term “black,” referring to profitability, which stems from the old bookkeeping practice of recording profits in black ink and losses in red ink. The idea is that retail businesses can sell enough on this single Friday (and the ensuing weekend) to put themselves “in the black” for the year.

However, long before it started appearing in advertisements and commercials, the term was used by overworked Philadelphia police officers. In the 1950s, crowds of shoppers and visitors flooded the City of Brotherly Love the day after Thanksgiving. Not only did Philadelphia stores tout significant sales and the unveiling of holiday decorations on this particular day, but the city also hosted the Army-Navy football game on Saturday of the same weekend.

As a result, traffic cops were required to work 12-hour shifts to deal with the crowds of drivers and pedestrians, and they were not allowed to take the day off. Over time, the annoyed officers—using a descriptive that’s no longer acceptable—started to refer to this dreaded workday as Black Friday.

The term spread to store salespeople, who used “Black Friday” to describe the long lines and general chaos they had to deal with that day. It remained Philadelphia slang for a few decades and spread to a few nearby cities, such as Trenton, N.J.

Finally, in the mid-1990s—celebrating the positive connotation of black ink—”Black Friday” swept the nation and started to appear in print and TV ad campaigns across the United States.

The Evolution of Black Friday

Somewhere along the way, Black Friday made the giant leap from congested streets and crowded stores to fevered shoppers fighting over parking spaces and tussling over the latest must-have toy. When did Black Friday become the fierce, over-the-top shopping event today?

That would be in the 2000s, when Black Friday was officially designated the biggest shopping day of the year. Until then, that title had gone to the Saturday before Christmas. Yet, as more retailers started promoting “can’t miss” post-Thanksgiving sales and the Black Friday discounts grew deeper and deeper, American consumers could no longer resist the pull of this big shopping day.

In 2011, Walmart announced that, instead of opening its doors on Friday morning, it would start sales on Thanksgiving evening. That started a frenzy among other big-box retailers, who quickly followed suit. Today, Black Friday is a more extended event—essentially a Black Weekend.5

According to the National Retail Federation (NRF), 196.7 million consumers in the U.S. shopped during the 2022 five-day holiday weekend between Thanksgiving Day and the following Monday that year, up nearly 17 million from 2021, clocking in at “the highest figure since NRF first started tracking this data in 2017.”

The average amount consumers spent on holiday items during the 2022 weekend was $325.44 (compared to $301.27 in 2021). Of that total, $229.21 went toward gifts, according to the NRF, which highlights that people now see it as an opportunity to load up on items they want for themselves, not just to check off their gift lists.

Black Friday vs. Cyber Monday

For online retailers, a similar tradition has arisen on the Monday following Thanksgiving—Cyber Monday. The idea is that consumers return to work after the Thanksgiving holiday weekend, ready to start shopping—and on their employer’s time. Online retailers often herald their promotions well before the day to compete against the Black Friday offerings at brick-and-mortar stores.

Although Black Friday tops Cyber Monday in terms of overall online sales, it has proven to be popular with consumers. About 87.2 million customers shopped online on Black Friday 2022, while the number for Cyber Monday was 77 million, according to the NRF.

Conclusion

  • Black Friday is the day after Thanksgiving and is symbolically seen as the start of the critical holiday shopping season for retailers.
  • In the lead-up to Black Friday, stores typically advertise significant discounts on electronics, toys, clothing, and other popular gifts.
  • Also crucial to retailers is Cyber Monday, the first day back to work for many consumers after the long holiday weekend, during which online retailers offer significant discounts.

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