While the final numbers through Cyber Monday (the Monday after Thanksgiving, December 2) aren’t in yet, it looks like retailers and consumers are having a busy Black Friday weekend in terms of foot traffic, but sales over the holiday weekend are not up as much as expected — likely because retailers “pulled sales” earlier into the season by offering discounts earlier in November.
Sales appear to be up about as much as projected, but these figures are fluid and changing constantly, especially if you count Thanksgiving day as part of the weekend (or if you do not).
Walmart reported its best Black Friday ever, processing approximately 10 million register transactions during a four-hour window on Thursday night, CEO of Walmart USA Bill Simon announced, with in-store traffic and sales remaining strong throughout Friday. Online, the company claims it received 400 million pageviews. Walmart has been mired in controversy since workers rallied against the company for meager pay and remaining open on Thanksgiving. Protesters are asking for $25,000 as an annual minimum wage.
Of course, the question will be whether the sales by retailers are simply pulling transactions which would have occurred later in December into November by offering deeper discounts and earlier shopping hours. On the other hand, the shopping season is relatively short this year (26 days) compared to last year (33 days), so retailers have acted accordingly.
The bigger news, in my view, is the fact that online and mobile shopping has grown exponentially over the years. So far this year is no exception:
A record-breaking $1 billion was spent online on Thanksgiving day, according to an analysis by Adobe Systems, which examined 180 million visits to more than 1,000 retail sites. Sales on eBay.com shot up 35% through noon EST compared to the same time last year on Black Friday, according to e-commerce firm ChannelAdvisor. Amazon.com sales jumped 25% over the same period, USA Today reports.
$1 billion is an extremely large amount of money spent, considering in 2010, people spent $407 million on Thanksgiving Day and in 2011, $479 million was spent. Last year, people spent $633 million on Thanksgiving Day. That is some incredible growth.
What is causing this growth? Here are a few of my (un)educated guesses:
1. More people have smartphones and more retailers have apps.
It’s amazing how many people have a smartphone these days. People are able to shop with their iPhones, Droid devices, (do BlackBerrys count?) iPads, other tablets, etc. This makes trips to the stores less necessary, in some situations. Other stores want to keep foot traffic going strong, so they may offer in-store only specials to get people to visit. But for the most part, retailers and other discount companies like Amazon are reaping huge benefits from e-commerce.
2. More people have smartphones and comparison shop with their smartphones.
Not only can someone shop from their phone, but a simple Google search can pull up a bunch of prices for certain items that the individual is shopping for. This is an incredible tool for consumers because they are able to put retailers on the spot and many times, obtain a “price match” from them. How many of us have witnessed this, or even utilized it in-store? This was unthinkable even 10 years ago. Now, the ability to comparison shop in-store and get a price match is standard operating procedure.
3. Technological advances keep prices down.
I love reading articles like this one about the cost of consumer electronics “back in the day.” A color television cost $729 in 1969. A much better, HD and flat screen TV costs $177 today. However, factoring in inflation, $729 in 1969 translates to over $4,000!
Technology makes people’s lives better. The fact that advances in technology lead to getting more for your dollar really helps the American consumer, and consumers around the world. It’s usually used in a pejorative context, but it is important to note that the poor in America likely have quite a few of the technological comforts that the rich have. This is a good thing. If TVs still cost $4,000 today, who would be able to buy them? At under $200, they’re a comfort that most can afford.
Of course, it should be noted that the costs of other things (such as clothing, for example) have increased due to inflation. This makes sense, because companies can manufacture a faster microprocessor for less over time, but the cost of raw materials is out of their hands.
4. The economy is improving, albeit slowly.
Sure, we are no where close to where we were in 2006 (or 1999, for that matter). Unemployment is still high and GDP is slowly creeping upward. At the same time, though, the economy is creating jobs. In a recovering economy, people are more likely to spend money on things like presents rather than more extravagant vacations or big ticket items, like automobiles.
As the economy recovers, pent-up consumer demand is there and ready to be released. We may be seeing some of that now. But people want a bargain (hence the reason why mobile purchases have skyrocketed).
Finally, one of the smarter takes which I read about on Twitter concerning Black Friday was those who realized that people who are shopping for deals are doing so because they need to save money in order to afford to buy gifts for their children, or other individuals. Rather than simply attacking the “gross consumerism” of Black Friday (as those on the left did), numerous empathetic conservatives understand that (1) times are tough; and (2) people buy things at a discount because they may not be able to afford to buy gifts for everyone at full retail price.
The average Black Friday shopper isn’t throwing punches or trampling the infirm. And most lower-income folks waiting all night for that Xbox aren’t doing it because they’re greedy. It’s because they want to put a smile on the face of their child and possibly feel guilty they couldn’t afford one before today.
The whole post is worth a read.
Bottom line: technology is making Black Friday more consumer-friendly in terms of price and convenience. That’s a win for Americans.
As always, free markets are better markets.
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Retail data will be king this week. Wait for the final Black Friday numbers to be released late Sunday or early Monday, but these won’t factor in Cyber Monday. Of course, initial jobless claims will be released on Thursday (estimated at 322k). GDP is expected to come in at 3.1% for the last quarter. Finally, we can also expect nonfarm payrolls to be released this week for November (projected at 180,000). A very busy week for data as we get into December.
Have a great week!