Next week sees the arrival of Black Friday – the annual marker of the beginning of the festive shopping season, and cue for millions of shoppers to descend on seasonal sales and offers.
Black Friday spending has risen steadily over the last few years, throughout the recession and resulting economic hardship.
Bucking the trend of an economy that suggested earning and spending powers had diminished, the amount spent on the Friday following Thanksgiving has increased every year of the last four.
Although the increases in retail figures for the most hectic shopping day of the year grew only marginally in 2008 and 2009, sales totals soared to $10.69 billion in 2010 and leapt a further 6.6% to $11.40 in 2011.
Can we expect the figures to rise again?
U.S. Economy: Out of Recession?
Signals that the country is out of recession are everywhere, from improved employment rates to near-target-level inflation.
On paper, it seems retailers should be prepared for a season of healthy spending but, as many members of the general public will tell you, the gap between reality and what is reported is still vast. This public perception, amid fears that significant benefits and tax credit cuts are to come, could tighten the wallets of shoppers this year, but, if statistics are to be believed, we could be on course for another record-breaking splurge on November 23rd.
Black Friday Spending: Access to Credit
In 2009, Black Friday shopping increased, but not to the extent of the first few credit-fueled boom years of the millennium. This could be an indication of credit facilities, such as credit cards and personal loans, becoming less readily available and affordable for many. This was the year that rates began to soar, and many started to feel the ‘crunch.’
The last year, however, has seen an increase in prominence of the short-term loans (often referred to as pay day loans) market. We already know that more and more families are relying on these high-interest credit agreements to fund the cost of living – it is a logical assumption that some will also be turning to short term solutions to fill stockings this year. Rising dependence on risky lending schemes could lead to a false inflation in shopping data this Black Friday – with excessive use of credit, sharp future cutbacks loom. Whilst there may be a boom in credit-funded sprees this festive period, shoppers resorting to payday loans run the risk of personal financial struggles in the New Year, possibly resulting in an enforced curbing of personal spending well into 2013.
Black Friday Shoppers: An Eye For a Bargain
Due to personal financial pressures, the way we approach shopping is changing, and these evolving habits can affect spending patterns significantly. The effects of a dwindling economy on pricing are two-fold.
People need and expect to pay less; retailers are forced into offering lower prices in accordance to spending trends.
The search for a bargain is a motive for shoppers to wait until major shopping event days, which traditionally see many retailers offering low-price sale items; the need to encourage spending prompts stores to provide more attractive promotions.
These trends can basically have the effect of leading to a crescendo of discount shopping on days like Black Friday, pushing up the retail figures for that one day, whilst not necessarily reflecting year-round spending habits or accurately representing the financial success of the retail industry as a whole.
Spending on the Other 364 Days of the Year
A look at general retail sales for the entire years of 2008 onwards shows that retail figures throughout the rest of the year do not correlate directly with the growth seen in Black Friday retail figures. According to the Census Bureau, annual general retail sales figures nose-dived by 8% in 2009 – a far more indicative reflection of the economy as a whole than the slight rise in Black Friday spending of 0.5%.
Black Friday: November 23, 2012
If sales figures rise again this year, it is far more likely to paint a picture of returning credit use and new-found reliance on discount products than provide a reliable indication of retail industry growth.
Shoppertrak. Black Friday Weekend Sales Increase. (2011). Accessed November 16, 2012.
Heher, A. Black Friday Retail Sales Up .5% From ’08. (2009). CBS. Accessed November 16, 2012.
United States Census Bureau. Annual Retail Trade Report. (2012). Accessed November 16, 2012.