Yet again, retailers of all stripes are gearing up for the Black Friday shopping holiday that follows Thanksgiving. Invariably the single-best sales day of the year in the U.S., Black Friday has for years been touted as the “make-or-break” event for many companies’ Q4 earnings. That axiom, however, may be proved somewhat less handy this year.
First, where did this consumer-oriented holiday originate from?
Origins of Black Friday—Real and Imagined
Retailers commonly peddle the backstory that Black Friday is the day when their earnings go from being “in the red” (negative) to “in the black” (positive—turning a profit). This, however, is a myth first used in the 1980s to sugarcoat the original meaning of the day. In fact, “Black Friday” acquired its name because of all the mischief and shoplifting that went on when major cities (originally, Philadelphia in the 1950s and 1960s) and urban shopping centers became inundated with tourists and suburbanites alike attracted by the holiday sales.
In its first use, “Black Friday” referred to the sweeping economic crash of 1869, when a pair of speculators tried to corner the U.S. gold market (unsuccessfully) and ended up destroying the stock market, bankrupting farmers and bankers across the country.
Sometime around 1985, the current usage and understanding of “Black Friday” become more common parlance around the nation.
The idea behind the name “Black Friday” existed much earlier, however. In 1939, due to Thanksgiving falling on one of the last days of November, a group of America’s largest retail companies sent a letter to President Franklin D. Roosevelt asking him to move the holiday further back. They needed more time to offer their holidays deals, which customarily began after Thanksgiving. Hence, the practice underpinning Black Friday was strong enough by the time of WWII that it prompted executive action!
Preparing for Disappointment
Black Friday is not expected to be nearly as big of a sales day this year compared to years past. More and more consumers are not only taking advantage of deals earlier in the holiday season but also can choose the alternative days of Small Business Saturday/Sunday and Cyber Monday. For example, Target runs deals for 10 consecutive leading up to Black Friday proper; Old Navy opens its doors at 4 pm Thanksgiving Day and doesn’t close again for 32 straight hours. With the vast expansion of online shopping, who wants to wait in line?
Beyond the upcoming “consumer holiday,” the fading luster of Black Friday also tells us something about a shift in post-recession U.S. consumer spending patterns. People are now more inclined to spend their extra money on experiences like dining out or going to a ballgame than on clothes, electronics, and other retail items. According to the New York Times, consumer spending accounts for 70% of economic activity in the United States.
The article added, “with businesses hesitant to invest heavily in new capacity, federal spending delayed, and sectors like construction and home building flattened after the recession, shoppers picked up much of the slack in the last few years.”
Whatever the results from this year’s spending bonanza, two things are true: 1) Shoppers are changing their habits; yet 2) Black Friday is never going away completely.