In 1939, the nation’s largest retailers sent Franklin D. Roosevelt an urgent plea. Thanksgiving fell on the last day of November that year, giving merchants too few days before Christmas to unleash the season’s sales. ADVERTISING In 1939, the nation’s
In 1939, the nation’s largest retailers sent Franklin D. Roosevelt an urgent plea. Thanksgiving fell on the last day of November that year, giving merchants too few days before Christmas to unleash the season’s sales.
The holiday might be a time-honored tradition, but wouldn’t Roosevelt consider moving the day up by a week?
The president’s acquiescence to retailers helped cement the pre-eminence of the post-Thanksgiving sales rush, now known as Black Friday. The day became an annual ritual, a family affair — a shopping orgy that delivered big profits for retailers, as well as a lift to the entire economy.
Seven decades later, Black Friday has lost its distinctive edge. Sure, tens of millions of Americans will still hit the malls this Friday. But the relentless race for holiday dollars has blunted the day’s oomph, as stores offer deep discounts weeks before Thanksgiving and year-round deals in stores and online are breeding sales fatigue. Some fed-up shoppers cheered this year when the outdoors retailer, REI, declared it was opting out of Black Friday sales altogether.
On the eve of yet another Thanksgiving weekend, retail experts and economists are asking the question: Is Black Friday over?
“It definitely matters so much less than it’s mattered in the past,” said John J. Canally, chief economic strategist at LPL Research. “The last couple of years, ‘Black Friday disappoints’ has been the usual story.”
But contrary to doom-and-gloom predictions this holiday season, dwindling sales for the long Thanksgiving weekend (which now begins Thursday afternoon) do not necessarily signal a cautious consumer. Americans are generally spending just as much of their hard-earned dollars as in the past.
Overall consumer spending since the beginning of 2014 has risen at a rate of 3 percent after lackluster gains in 2012 and 2013, and most stores rack up decent profits, on an earnings per share basis, during their holiday quarter.
The decline of Black Friday instead points to a shift in the way consumers spend their money.
“They’re online,” Canally said. “And they’re spending more on experiences. A day at the spa, a baseball game, the ballet — rather than a sweater or a pair of socks that no one wants.”
As a result, retailers rang up $51 billion on the day after Thanksgiving last year, down from a peak of almost $60 billion in 2012, according to the San Diego-based private equity firm LPL Research, which crunched data from the National Retail Federation and comScore.
The history of Black Friday tracks the history of modern U.S. retailing, and of personal consumption in the United States, which makes up a bigger part of the economy than in almost any other industrialized country.
Consumer spending’s share of total economic output grew substantially in the 1980s, 1990s and 2000s. And shopping became almost a 24/7 activity.
Holiday sales begin earlier and earlier. A Sears ad from 1983 advertises an 8 a.m. Friday opening. By the late 1980s, national retailers were offering dawn “doorbuster” deals.
That discounting escalated by leaps and bounds in the dismal years after the housing boom collapsed and Lehman Bros.’ failure ushered in a global financial panic. Sales that had generally been confined to two times a year multiplied.
Target now offers 10 days of deals leading up to Black Friday. Old Navy will stay open for 32 consecutive hours, starting at 4 p.m. Thanksgiving Day.
But Paul Arnhold is not interested. On Black Friday, he plans to spend the morning solo cycling — followed by time with his wife Shana Arnhold and their 3-year-old son. Several Black Fridays ago, he trekked with his wife to a packed furniture store for a deal on a digital photo frame — only to find the store had long sold out of the item.
This year, the Arnholds, who live in Lenexa, Kansas, part of the Kansas City metropolitan area, are spreading out their Christmas shopping, grabbing Royals commemorative gear in post-World Series sales, and scouring e-commerce sites like Etsy for handmade gifts.
A lot of their spending has also gone into their new home, which they bought in May. They have refinished the hardwood floors and hired a carpenter to build cabinets and shelves and to touch up their fireplace.
“Waiting in lines forever and other crazy things just makes you think: Is it worth it?” said Paul Arnhold, 35, who works in customer marketing at Lexmark, the software and printer company. “The last place I want to be this weekend is in a store.”
Some of Arnhold’s spending patterns are mirrored in recent retail data. Spending on autos, home furnishings, sports and hobbies, and eating out grew much faster than spending on clothing, accessories or electronics.
Shifts in spending and behavior have kept many stores discounting heavily to pique shoppers’ interest, hurting retailers’ profit margins. And this year, there are fresh worries among fashion retailers and department stores as unseasonably warm weather has hurt sales of winter coats and boots.
Awash with merchandise after missing sales targets, Nordstrom and Macy’s said this month that they would mark down items even more aggressively this holiday season.
But even as some individual chains suffer, economists and investment strategists insist the overall outlook for the holiday season remains robust.
Philip J. Orlando, chief equity strategist at Federated Investors, said he saw enormous pent-up demand, for example, for home furnishings at retailers like Home Depot or Lowe’s.
These days, with the Great Recession finally starting to become a distant memory, younger consumers, Orlando said, have “finally gotten jobs, they’re getting their first homes and they want to fix it up rather than buying sweaters.”
“We fully respect the fact that Macy’s and Nordstrom put out atrocious numbers,” he said. “But we’re going to see a better Christmas than these missed numbers suggest. This doesn’t sound the death knell for the consumer.”
Chris G. Christopher Jr., an economist at IHS, a research firm which tracks the economy, said he was looking for retail sales this holiday season to be up by about 3.5 percent from last year’s levels. While that isn’t as strong as the 4.1 percent gain recorded in 2014, it is still well above the 2.7 percent advance seen in 2012 and 2013.
Christopher also estimates that digital shopping will rise by 11.7 percent this year, lifting the overall proportion of online sales to 14.7 percent of total retail activity, or $1 out of every $7 that consumers lay out this holiday season.
That’s not great news for brick-and-mortar retailers (although more and more are expanding their presence online), and could make lining up for Black Friday sales feel pointless, even quaint. But online sales also drive economic growth.
While wages have stagnated and the recovery over the past six years has fallen short of past trends, consumer spending still represents nearly 70 percent of economic activity.
And with businesses hesitant to invest heavily in new capacity, federal spending delayed, and sectors like construction and home building flattened after the recession, shoppers picked up much of the slack in the last few years.
Michael Gapen, chief U.S. economist at Barclays, cites the drop in energy prices this year, along with solid hiring and healthier household balance sheets, to explain why consumers not only have more to spend, but will feel more confident doing so.
“It would be a surprise if retail sales during the holiday season were soft,” he said.
And even traditional retailers aren’t giving up hope. Gerald L. Storch, chief executive of the Hudson’s Bay Co., which owns Saks Fifth Avenue and Lord & Taylor, struck a positive tone on the evolving consumer. The shifts in spending were cyclical, he said.
