Two weeks ago, I wrote a post lamenting that it didn't seem that Black Friday had a lot driving it this year. As it turns out, I was correct in my assessments as it was reported that sales were down over 10% for the Black Friday weekend. Predictably, Monday was an ugly day on Wall Street, as investors worried that this indicated a slowdown in the economy.
While the sales figures are discouraging, I think that they are explainable by several factors and they are not an indicator to any sort of economic slowdown.
Why Black Friday Sales Were Down
There are several reasons that I believe explain the numbers this year.
- Lower tablet and TV sales – In my previous article, I wrote about how many of the items that had drawn consumers into stores on Black Friday past are no longer in demand. The deals for tablets and TVs are still there, but compared to 2012, which was the peak of Black Friday sales, there just aren't as many people who are looking for a tablet or a new TV, because they already have one. Maybe even one that they bought on a previous Black Friday.
- Black Friday is no longer a day or even a weekend – I have one e-mail account that's pretty much dedicated to signing up for store promotions. Starting on Monday of last week, the volume of e-mails skyrocketed with every subject announcing that ‘Black Friday Sales Start Now!' The sales no longer start at 6am or 4am on Black Friday, and even the Thanksgiving Day openings aren't enough. It's more Black Friday week, and many of the sales offered throughout the week leading up to Black Friday were not captured in the sales figures.
- The sales themselves were, by and large, lame – There are traditionally two levels to Black Friday sales: The first is Door Buster deals that feature items sold at cost or at a loss, with the idea to draw people in. The second are Sale items that offer lower prices that still allow companies to turn a profit but are enough to entice shoppers to buy. This year, the Door Busters were there, but the normal Sale items that keep Black Friday shoppers moving from store to store simply weren't there. I looked through the Black Friday ads and was very impressed. My wife went to a few stores and reported that Kohl's was offering a bit of extra Kohl's cash, but the prices were not any different than on a normal day, and Toys R Us barely had anything at a discount. Bottom line, if shoppers aren't going to get any better deal by going out on Black Friday as opposed to any other day between now and Christmas, many will choose not to.
- Black Friday is no longer new and exciting – Black Friday has really taken off just over the last few years. When stores started opening up super early and lines started forming and talking about getting that new TV the next day was the big discussion over the turkey dinner, Black Friday was cool and an event all of its own. Now that it's been around for a while, and is now getting diluted with longer sales, and has less appeal due to less ‘must have' items, a decline seems almost expected. Wall Street and the media want sales and profits to grow every year, but in some cases, that's just not possible.
- They might be comparing apples to oranges – Along the same lines, I look at the last couple of years, when TV and tablet sales drove the sales spikes, and wonder if the comparison numbers are skewed. Many of the items purchased during the Boom Years of Black Friday had nothing to do with the Christmas season of which Black Friday is traditionally associated. Instead, people purchased items for themselves, and just happened to do so on the day that traditionally kicks off Christmas shopping.
Why Lower Black Friday Sales Aren't Concerning
In the end, Wall Street dropped big time on Monday after hearing the numbers. I think this was a big mistake, and the numbers really won't matter until the final sales numbers for the entire 2014 holiday season are released. That's going to take time. I think between now and then, you'll get a lot more people out there shopping, sales will get better as stores try to strike a balance between higher margins and higher volumes, and customers wait out the stores to see what deals can fall their way. Without great deals or must have products to drive customers into stores, they may not have gone yet, but with a slowly improving economy and steadily improving employment numbers, I do believe that customers will show up.
Hopefully at some point, Wall Street puts in perspective what many shoppers already know, that Black Friday is no longer the day to do holiday shopping, but instead is just one of many days.
Readers, were you one of many who seemed to skip Black Friday this year? What correlation do you see between lower Black Friday sales and the overall sales for the season?