Black Friday Is Coming

I have never really liked Black Friday.  I don’t like the crowds, the crazies, or the early morning lines.  It is, however, interesting to view it from a management/economic perspective.  It used to be that the retailers were participating in a simultaneous, one-shot game for Black Friday each year.  They would all publish their ads in the newspaper on Thanksgiving and hope their products would be in-demand and their prices would be the best thus creating a long, long, line out their front door that began forming at some unearthly hour in the morning.  My experience at that point was that I would wait in this line, freezing my toes off, just to get into the store to find that the item I was hoping to purchase was sold out after 20 people entered the store. 

Retailers now seem to be trying to change the timing and order of moves, creating a sequential-move game. According to  Black Friday and Beyond: The ultimate holiday shopping guide, an article by CNN money, retailers are already releasing information about deals to be had on Black Friday.  It seems that retailers are hoping that by releasing sale information early they may be able to create first-mover advantages yielding higher pay-offs.  This strategy, along with increased “pre-sales and teaser ads”, Thanksgiving Day, and Cyber Monday deals, may help some retailers grab a larger piece of the estimated $369 average to be spent per consumer this year.  As for me, I’ll be keeping my toes toasty warm and will be spending my Black Friday with a book and my family. I hope you all have a safe and happy Thanksgiving weekend as well, no matter how you choose to spend it.

1 comment:

Dr. Tufte said...

CChilds: 100/100

I like the observation that there maybe some strategy changing going on here.

Black Friday is an example of a topic I stress more than texts tend to: the elasticity of novelty. I think that in some ways the behavior of shoppers has to be more inelastic on Black Friday than on other days: sort of, we're here and therefore we've got to buy something. There are actually lots of examples of people buying things, and paying mark-ups consistent with inelastic demand, just for the novelty: it's been 40 years, and still the "pet rock" fad is fairly well-known across America.

One of the things that I wonder about Black Friday, and to my knowledge there's no research on this because the data is closely held, is to what extent it is truly profitable. Measuring that would need to account for two things: 1) it seems to me that the Black Friday sales mean that there's a shift to high volume low margin, and it's not clear that increases profits, and 2) to what extent are purchases that would just be made elsewhere in the holiday season just shifted to Black Friday?