Millions of shoppers will once again arise before daybreak on Friday morning and descend into the traditional commercial Bacchanal that is Black Friday. But given the hyper-competitive nature of the retail business and the expectations of bargain hunting consumers, the mega doorbuster sale is losing its unique appeal. From Halloween through Christmas Eve, the door is always open and the blue light is on.
According to the National Retail Federation, one fifth of all retail sales occur in November and December. This is critical for the economy because retail spending is a major contributor to economic activity in the United States, and holiday shopping accounts for over 5 percent of U.S. gross domestic product for the entire year. Until recently, merchants have depended heavily on Black Friday to make or break the season and therefore the year.
For a number of reasons, the makeup of holiday shopping is changing and will be even more different this year. Having already breached the previously unthinkable Thanksgiving Day prohibition, stores will open earlier this year on Thursday. Meanwhile, many big boxes and online purveyors launched aggressive discounting as early as Nov. 1, extended Black Friday pricing over an entire week, offered to match competitors’ advertised prices, and guaranteed availability of popular sale items to further obviate the need to be in line at dark thirty.
On balance, 2014 is shaping up as a very good year for retailers. The NRF expects retail sales growth of 4.1 percent over last year, a significant gain over the 2013 growth rate of 3 percent. However, less of that growth is expected to come on Friday, as just 28 percent of Americans plan to set foot in the stores, according to a survey by Bankrate.com. Shoppers have grown increasingly sophisticated since the recession and are learning to expect heavy discounting throughout the season. Some have gotten an early jump with pre-sale sales, while others expect merchants to discount even more aggressively later on to clear store shelves.
One interesting finding in the Bankrate survey involves the composition of Black Friday shoppers. Among bargain hunters aged 18 to 29, 54 percent expect to shop in stores or online the day after Thanksgiving, compared with just 35 percent of 50 to 64 year olds. And despite their technological proclivities, the younger generation is the most likely group to show up in person. Millennials, it seems, still want to bust the doors.
Another encouraging finding involves how consumers plan to pay for their loot this year. Three quarters of black Friday shoppers expect to use cash or debit cards to make their purchases, while just one fourth said they will slap their gifts on a credit card. This is evidence that households are maintaining the fiscal discipline they regained following the economic downturn and bodes well for continued moderate but sustained expansion of retail spending going forward.
While 2014 sales promise to be more robust, individual retailers are nervous about nabbing their share of the action. Hence the early price discounting, extended Black Week promotions, price matching and other enticements. But the best may be yet to come as Christmas approaches. Many analysts believe this will be the most relentlessly promoted holiday shopping season on record, which means that consumers should be able to enjoy their Thanksgiving and still stake their claims without having to fight the crowds.