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Black Friday Becomes Retail Black Hole of Profits

11/23/2011

The holiday season is about to get underway with what is expected to be the single greatest spending orgy in the history of commerce with more than $20 billion spent on Black Friday compared with $19.3 billion last year, according to MasterCard Advisors SpendingPulse.

As many as 152 million people plan to shop Black Friday Weekend, compared with 138 million who planned to do so last year, according to a preliminary Black Friday shopping survey, conducted for the National Retail Federation by BIGresearch.

The economic weakness of recent years fueled the deal-buying madness until the industry this year basically hit the point of no return and chain after chain announced they would be open at midnight on Black Friday with a handful pushing back even further into Thanksgiving. On Nov. 15th I wrote “Black Friday Has Become Black Thursday” predicting the open earlier phenomenon would be significantly impactful on Black Friday.

The point of no return is into the black hole of discounting. It appears the only reason consumers shop on the Friday after Thanksgiving is because of the “deals”. Not because many people have the day off, or it’s the start of the holiday season, or (perhaps more traditionally) it’s when stores finally have their holiday displays up and merchandise available. It’s the deals.

This is a slippery slope for retailers. What happens next? Does Black Friday becomes Black Week, Black November…then fades to black. It is no longer an event, it is a discounting season that retailers have trained consumers to anticipate and respond to. That’s too bad for retailers because most merchants cannot afford to give away the margin dollars at this time of year. After all, isn’t that how the term “Black Friday” came to pass? It was the day when most retailers flipped from operating in the red to profitably operating in the black.

At this rate the new Black Friday will be the day after Christmas – regardless of what day of the week it falls on.

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