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It’s that time of year again, gathering with family and friends while indulging in family Thanksgiving recipes. Of course, all of this leads to that favorite spot on the sofa watching the Detroit Lions and Dallas Cowboys play football. Thanksgiving is a holiday to spend time with family, but it’s also a key economical measuring stick.
Originally, Thursday was chosen to celebrate Thanksgiving so it would be distanced from the Sabbath. Though the four-day weekend was not the original intent of celebrating on Thursday, it has become a nice modern-day convenience. In addition, it opened the door for one of the greatest marketing opportunities in history, Black Friday.
It is believed by many that the term Black Friday derives from the concept that businesses operate at a financial loss, or are “in the red,” until the day after Thanksgiving, when massive sales finally allow them to turn a profit or put them “in the black.” However, this is untrue.
The term dates to the early 1960s, when police officers in Philadelphia began using the phrase “Black Friday” to describe the chaos that happened when crowds of suburban tourists came into the city to begin their holiday shopping and, in some years, attend Saturday’s annual Army-Navy football game. The huge crowds created a nightmare for the police, who worked long shifts as they dealt with traffic jams, accidents, shoplifting, and other issues.
The phrase “Black Friday” sales signified a positive boost in retail sales, but it didn’t grow nationwide until the late 1980s when merchants started to spread the red-to-black profit narrative. Black Friday was described as the day stores began to turn a profit for the year and as the biggest shopping day in the United States. Too help boost sales, companies would offer Black Friday deals, slashing prices on hard-to-get items. Before internet shopping was available, people would get in line at major retailers the night before, sometime camping out all night. The doors would open, and hundreds, if not thousands, of people would rush the store, many times causing injuries. Admittedly, I was once at Target at 4 am to make sure my kids had an Elmo doll. Truth be told, it was more about the experience and adrenaline of the rush, versus the kid’s excitement for a certain doll.
In recent years, Black Friday has been followed by other shopping holidays, including Small Business Saturday, which encourages shoppers to visit local retailers, and Cyber Monday, which promotes shopping online. Giving Tuesday has also emerged to spur charitable donations.
Financial stations such as CNBC have capitalized on Black Friday as an indicator of how the economy is doing. Years ago, they would show the chaos of the doors opening and the crowds swarming the stores; now, it’s the online sales coinciding with store sales. However, there is validity in Black Friday weekend and the state of the economy.
Consumer Confidence: High sales numbers often indicate strong consumer confidence. For example, Black Friday 2023 saw a record $9.8 billion in U.S online sales, up 7.5% from the previous year. This suggest that consumers were willing to spend, reflecting optimism about their financial situation.
Economic Health: Increased spending during Black Friday can signal a healthy economy. When people have disposable income, they are more likely to take advantage of sales and discounts. Conversely, lower sales might indicate economic uncertainty or tighter budgets. Another potential concern is the growing credit card debt among consumers. Credit allows continued spending, but eventually, the credit limit is reached. At this point, open credit is plentiful, meaning consumers can continue using their plastic.
Trends in Online Shopping Behaviours: The shift towards online shopping has been significant. In 2023, a large portion of Black Friday sales came from online purchases, with mobile shopping playing a major role. This trend highlights the growing importance of e-commerce and the changing landscape of retail.
Overall, Black Friday sales numbers are a useful barometer for understanding consumer sentiment and economic trends. They can help economists, businesses, and policymakers gauge the health of the economy and potentially predict future spending patterns.
