This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
12/01/2013
A Not So Crazy Black Friday
Every year thousands of people line up the day after thanksgiving to try and get a great deal on various merchandise. This day has become known as "Black Friday". Year after year people go out the night after eating their turkey dinner and stand in lines to save a few bucks. I will admit that I have succumbed to the urge a few years and have been found among the heard searching for good deals. Most people go out to purchase Christmas gifts for their families and friends and end up buying a bunch of other stuff that they don't really need. Every year the crowds get bigger and the deals get better. You would think that with a struggling economy it would force more and more people out into these massive crowds on black Friday to be able to afford the Christmas gifts that their children or spouses desperately want, however this year it was different. According to the NY Times article Gloomy Numbers for Holiday Shopping's Big Weekend, sales were down $1.7 billion from last year. There could be many different reasons for the decline in sales including more online shopping, earlier sales, low wages and economic difficulties, spacing out Christmas shopping expenses, etc. It would make sense that people can no longer afford to drop hundreds of dollars all at once on gifts for the holidays so they spread it out instead. We can see that as inflation continues to rise and wages stay stagnant that it become increasingly difficult for people to partake in the Black Friday nonsense. I could be that none of this has anything to do with economics and that people are just wising up and realizing that its worth spending an extra 30 dollars for a toy than spending all night sitting in a store witnessing grown adults fight and bicker over petty little gifts just to save a buck.
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11 comments:
Chad: 88/100 (There's at least 1 mistake in this clause: "... succumbed to the urge a few years and have been found among the heard searching ...", and I think you need an "It" here: " I could be that none of this ...")
I have commented elsewhere about the non-monetary costs of Black Friday. It's a good point, I just won't repeat it.
A lot of the source article suggests that spending is OK when considering the season as a whole. So it may be that people are just shifting their purchases.
Unfortunately I too have been found in the hordes of black Friday shoppers but I no longer participate in the frenzy. The main reason I do not go shopping on black Friday is, it not worth the hassle of standing in line and fighting the crowds. When I was living in Hawaii a few years ago I was pushed into a shelf and threatened by a mom and her kids over a Blu-Ray player. After that incident I decided it is better to find a good job, work hard, and be frugal with my money throughout the year so that I can afford the things I want and not have to deal with black Friday shoppers. I do still check online retailers for deals, like this year I purchased a steamer mop which was 70% off on Amazon.com.
Mike: 47/50 (I think you mean "... it that it is not worth the hassle..." rather than "... is, it not worth the hassle...")
Obviously, this is a good example of non-monetary costs impacting purchases.
From a ManEc perspective, what's interesting is that this helps quantify how big those non-monetary costs are. Given that Black Friday prices are, say, 20% lower, this would suggest that the non-monetary costs of Black Friday store hassles are at least 20% of the price of goods.
That's a lot, and clearly something that managers should be thinking about.
I think that the whole Black Friday extravaganza has a lot to do with income elasticity. Somebody making $50k a year might not be as interested in participating in it as somebody that only earns $35k a year might be. The more income a person makes, the less sensitive they probably are to the pricing gimmicks that you find with Black Friday deals. However, on the other hand, you cannot put a price on the personal fulfillment one might get from rushing the store and loading up their cart with the latest technological gadgets and other useless toys.
I think the biggest reason Black Friday this year appears to have been lackluster is because, unlike years past, sales are being spread out over what is coming to be known as "Black Weekend". Although sales on Black Friday were down 13.2% from last year, if you compare the cumulative sales over the entire "Black Weekend", sales were actually up 1% from last year.
Less and less people are waiting in long lines on Black Friday to get those deals because more and more people are turning to the internet. Additionally, according to IBM's 2013 Black Friday Report, those customers that are going to the internet to find deals are even spending more than they did last year, as the average online order dollar value increased from last year by 15% for home goods, by 3.5% for apparel, and by 15% for department stores' websites.
Black Friday is continuing to grow, but looking at the sales figures for that Friday alone is no longer a valid analysis of the event's success.
I would definitely agree with Mazer on this. Mike also makes a good point that people who have more disposable income are less likely to put themselves through the hardship of a long line to possibly buy something at a lower cost. My husband and I have been married 5 Black Friday's and have yet to participate in one, and we definitely do not have a lot of disposable income.
This is where I come to agreement with Mazer. The Black Weekend has come into effect, and instead of one day, people are now given two to three days of shopping. Many retailers have taken further advantage of Cyber Monday which has caused people to shift their spending habits further away from brick and mortar stores.
I believe this trend will continue in the future as people become less willing to wait in long lines when they can find a better deal online.
I have to disagree about the deals on Black Friday getting better each year. As a veteran Black Friday shopper, it seems that the deals are always (more or less) the same- 20% off. Something that I found to be interesting this year, is the move to open earlier. I think this is a great idea for the stores and the consumers. This year I was able to shop at two stores that opened on thursday and four stores that opened on friday. I bought everything on my shopping list, which included black friday deals and storewide discounts. Another added benefit of stores opening earlier and varying their opening time, is consumer’s health. Consumers are able to start early thursday, finish by midnight then start friday fresh. I think this creates a more enjoyable shopping experience and hopefully less fights at 1am in the morning.
I have to disagree about the deals on Black Friday getting better each year. As a veteran Black Friday shopper, it seems that the deals are always (more or less) the same- 20% off. Something that I found to be interesting this year, is the move to open earlier. I think this is a great idea for the stores and the consumers. This year I was able to shop at two stores that opened on thursday and four stores that opened on friday. I bought everything on my shopping list, which included black friday deals and storewide discounts. Another added benefit of stores opening earlier and varying their opening time, is consumer’s health. Consumers are able to start early thursday, finish by midnight then start again friday fresh. I think this creates a more enjoyable shopping experience and hopefully less fights at 1am in the morning.
Black Friday, the day after Thanksgiving, has traditionally been the kick-start to the holiday shopping season. For many retailers, this is the single biggest shopping day of the year. Thanksgiving is a holiday that doesn’t have a set calendar date; it is always on the 4th Thursday in November, which was the 28th this year, but last year Thanksgiving was on the 22nd. This means that consumers have six fewer days (compared to last year) to get their shopping done. I wonder if the late Thanksgiving will translate into fewer overall sales this holiday season, or if consumers will simply buy more per day in the shortened season.
BOHICA: 50/50
Mazer: 50/50
Quinn: 50/50
Emma182: 35/50 (failure to capitalize 5 times)
Bob
Lots of comments: you people are really into shopping, aren't you?
BOHICA's right, it seems to me like Black Friday shopping is an inferior good. But I think there's an error here is saying that you can't put a value on the shopping experience: I disagree, an economist would use the time spent and the money saved to puts bounds on that value.
I think Mazer and Quinn raise a valid point. On the other hand, I don't know that any one is forced to measure the revenue the way they do. They may just have to overcome some inertia to update the time frame.
As to Emma182, I think the "compared to what" question needs to be asked. I think it's fine that you liked the hours that you faced. What I wonder is if **all** the opening times were set back by 24 hours, would your benefits have gone down? If not, then I think this is a prisoners' dilemma, and we're not at the best outcome.
Bob, I think this is a useful starting point. But, to make it more useful, follow up with something like this. If fewer days means more spending per day, then should the growth rate threshold that we think of as "good" be raised or lowered?
Bob: 50/50
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