Black Friday: What is it? How is it important to economists?
What Is Black Friday?
The day after the American Thanksgiving holiday is referred to as "Black Friday," and for many workers, that day has historically been a holiday as well. The holiday shopping season officially starts on this day, which is customarily filled with exciting sales and deep discounts.
Black Friday sales are frequently regarded as a barometer for the nation's overall economic health and a way for economists to assess the confidence of the typical American when it comes to discretionary spending. Lower Black Friday sales numbers are seen as a sign of slower growth by those who subscribe to the Keynesian theory that consumer spending drives economic activity.
The Meaning of Black Friday
On Black Friday, it's usual for retailers to run special deals both in-store and online. To draw customers on Black Friday, many businesses start their doors at dawn. Some retailers have gone so far as to continue operating during the Thanksgiving holiday in order to compete with other businesses, while others start promoting deals earlier in November.
The most devoted have been known to skip Thanksgiving dinner altogether and camp out in parking lots for days or even weeks to get great deals. Extremely avid bargain hunters have been known to camp out overnight on Thanksgiving to secure a place in line at a favorite store. Regularly, the sales are extended through Sunday, and both brick-and-mortar stores and online retailers experience a surge in business.
Black Friday and Shopping Patterns
Retailers may plan their Black Friday sales for an entire year. They take advantage of the day to offer doorbusters and deep discounts on seasonal items like holiday decorations and traditional holiday gifts, as well as to offer rock-bottom prices on excess inventory.
Retailers also offer sizable discounts on expensive goods and the best-selling brands of TVs, smartphones, and other electronics to entice customers inside where they will then buy higher-margin products. Retailers go to great lengths to ensure that the details of Black Friday advertisements don't leak out to the public in advance because they are frequently so eagerly anticipated.
In the absence of sufficient security, Black Friday shoppers frequently shop for the hottest trending items, which can result in stampedes and violence. For instance, on Black Friday in 1983, shoppers got into altercations, fistfights, and stampedes to purchase Cabbage Patch Kids dolls, the coveted toy of the year that was also rumored to be in short supply. Sadly, on Black Friday in 2008, a worker at a large retailer was crushed to death as crowds of customers pushed their way through the doors.
The Surprising History of Black Friday
Long before the term "Black Friday" was actually coined, retailers were throwing after-Thanksgiving sales. Stores have promoted big sales the day after Thanksgiving for decades in an effort to launch the holiday shopping season with a bang and draw throngs of customers, banking on the fact that many companies and businesses gave employees that Friday off.
Why then the name? Some claim that the name "Black Friday" was chosen as a nod to the term "black" for profitability, which comes from the traditional practice of recording profits in black ink and losses in red ink when keeping books. The goal is for retail businesses to make enough sales on this Friday (and the following weekend) to make money for the rest of the year.
However, the phrase was actually created by overworked Philadelphia police officers long before it began to appear in advertisements and commercials. The day after Thanksgiving in the 1950s saw a huge influx of shoppers and tourists in the City of Brotherly Love. On this special day, Philadelphia retailers advertised significant discounts and the debut of holiday decorations, and on the Saturday of the same weekend, the city also played host to the Army-Navy football game.
To deal with the hordes of motorists and pedestrians, traffic cops were forced to work 12-hour shifts and were not allowed to take the day off. Over time, the irritated officers began to refer to this dreaded workday as Black Friday, using a term that is no longer acceptable.
By using "Black Friday" to describe the lengthy lines and general chaos they had to deal with on that day, store salespeople spread the phrase. For several decades, it was only used in Philadelphia and only a few nearby cities, like Trenton, New Jersey.
Finally, in the middle of the 1990s, "Black Friday" swept the country and began to appear in print and television ad campaigns all over the United States, celebrating the positive connotation of the color black.
The Evolution of Black Friday
Black Friday has evolved over time from congested streets and crowded stores to fevered shoppers squabbling over parking spots and the newest must-have toy. When did Black Friday turn into the maddening, excessive shopping event that it is now?
Black Friday was formally recognized as the busiest shopping day of the year in the 2000s, at that point. That honor had previously been reserved for the Saturday before Christmas. But as more stores began advertising "can't miss" post-Thanksgiving sales, and as Black Friday deals got bigger and bigger, American shoppers were powerless to resist the allure of this major shopping day.
In 2011, Walmart made the announcement that it would begin selling items on Thanksgiving night rather than opening its doors on Friday morning. Other big-box retailers went into a frenzy after that and quickly imitated it. Black Friday is now a longer occasion called the Black Weekend.
Black Friday vs. Cyber Monday
On the Monday after Thanksgiving, a similar custom known as "Cyber Monday" has developed for online retailers. After the Thanksgiving holiday weekend, consumers are expected to return to work eager to start shopping. To compete with the Black Friday deals at brick-and-mortar stores, online retailers frequently announce their promotions and sales before the actual day.
As a result, Cyber Monday has been successful in terms of sales with consumers. Although Black Friday has since 2019 surpassed Cyber Monday as the busiest online shopping day of the year, Cyber Monday had previously held that title.
Nearly 180 million Americans, down slightly from 186.4 million shoppers in 2020, made purchases during the five-day holiday weekend between Thanksgiving Day and Cyber Monday in 2021, according to the National Retail Federation (NRF). Despite problems with the supply chain, inflation, and the ongoing pandemic, the NRF projects that consumers spent a record-high $886.7 billion. This represents a 14.1% increase over consumer spending in 2020. The average amount spent over the holiday weekend in 2921 was $301.27, which was a slight decrease from the average of $311.75 in 2020. According to the NRT, $215.40 of that total was spent on presents. On November 3, the NRF forecasted that holiday sales would increase overall by 6% to 8% in 2022, reaching between $942.6 billion and $960.4 billion. It didn't offer a separate forecast for Thanksgiving Day-Cyber Monday or for Black Friday.
For the first time, more than 100 million people made purchases online on Black Friday in 2020, and the proportion of online-only shoppers rose by 44% over the course of the holiday season. However, many stores stayed closed on Thanksgiving 2020 due to the COVID-19 pandemic and instead offered Black Friday deals online. According to the NRF, 127.8 million consumers made online purchases in 2021 as opposed to 145.4 million in 2020. Compared to 92.3 million shoppers in 2020, 104.9 million people made in-store purchases in 2021.
How soon is Black Friday?
The following day after Thanksgiving is Black Friday. Black Friday will fall on November 25 in 2022.
Why Is Black Friday Important to Economists?
Consumer spending on Black Friday is used to gauge the health of the economy. The ability to measure consumer confidence and discretionary spending is provided to economists.
How Does Cyber Monday Work?
The Monday after Thanksgiving weekend is known as "Cyber Monday" (Nov. 28 in 2022). On this day, both traditional and online retailers offer special, website-only discounts.