As transportation services gotten faster and cheaper, coupled with the wide availability of consumer credits such as checking and credit cards, Black Friday has evolved into a very different creature today than from when it was termed half a century ago. The wide spread of consumer credits means most of us can buy the items we want whenever we want it and spread the payment over many months, so the traditional pent-up buying pressure that occurs on Black Friday did not exist anymore. The cheaper and faster transpiration means most department stores order and stock much smaller quantity of merchandises but reorders and is replenished much faster and more frequently. A look at our nation’s leading retailers’ financial reports shows that most of them are profitable, or are “in the black”, almost year round, and relies less on the “Black Friday” to be profitable. Even so, Black Friday has become an important part of the retail strategy.

Today, when the few large national retailing department stores faces serious competitive pressure from the large discounters, Black Friday is just as important a retail event as before but with significant difference. In the early days of Black Friday, the consumer naturally drove the sales pressure because the lack of goods, where as today’s Black Friday is artificially driven by the retailer through deeply discounted goods. Most retailers have an abundance of goods, but they artificially price certain hot items near or below cost to drive demand. They then send out special mailer to promote these deeply discount items with extra early store hours to drive up the consumer’s desire for these products. Many sought-after electronic gadgets and games are also released during the Black Friday in order to increase the store traffic. Around many towns in the United States, it is quite common to see people camped out overnight in front of retail stores in order to get those loss-leader or to be one of the first few hundred to get the newest game or gadget release. Many stores passes out limited quantity vouchers to campers in hope of an orderly and calm Black Friday shoppers. Despite this type of voucher and extra security, injuries are not uncommon. Just last year, two customers were shot and killed in front of a Toys R Us in Palm Desert, California, during an argument. A Wal-mart worker and a pregnant woman were trampled on that day. The worker died from the incidence, while the pregnant mother only suffered hospitalization.

So why do the retailers keep up this Holiday tradition?  Mainly because it is profitable. Many marketing studies prove that even the most committed shopper, who go into the store with a shopping list, typically buy other undiscounted items along with the loss leader. The massive amount of shoppers buying non-discounted items helps Black Friday’s bottom line by making large profit so the deeply-discounted item are not truly unprofitable. This kind of shopping psychology works even on those who consider themselves “window shoppers” or people just going along for the experience.

The continual success of Black Friday in help boosts the retail profit has caused a lot of companies to target Black Friday as a product release date to create media stories, and to ensure the product enjoys a powerful and successful sales launch. Toys and electronic gadgets are the most sought after Christmas gifts and often the most discounted, sometime down to half o their manufacture suggested retail replica in order to draw customers in.

Cyber Monday

In 2005, the National Retail Federation introduced a term that is a cousin to the Black Friday, coined “Cyber Monday.” This term refers to an interesting event people noticed, starting in 2000, that the online sales spiked the Monday after Thanksgiving and Black Friday. If you will remember, 2000 marked the beginning of the online retail boom when merchants opened up online storefront, but residential high-speed Internet service provider was still scarce and the coverage was not as widely spread as it is today. The retail analyst believe majority of people who did not physically go to the store on Black Friday was taking advantage of their office’s high-speed internet to order items online when they got back to the office on Monday.

With more residential high-speed Internet available in 2009, the Cyber Monday event may go away as more and more retailers are offering the same type of deep discount on their Internet storefront, and more and more people might decide to stay home with their family and start other new holiday traditions, or just continue the food coma they suffered on Thanksgiving Day.

(To be continued…)