Black Friday weekend was not the sales blockbuster retailers had hoped. In fact, the number of shoppers hitting the stores during the four-day period commencing on Thanksgiving and stretching through Sunday was down by more than 5% compared with last year, and overall spending was down 11%, according to National Retail Federation (NRF) data. The NRF blamed "early holiday promotions" as a key reason for the weekend's sales slump. In other words, shoppers were buying less over the weekend because they had been buying more in the days and weeks before Thanksgiving—understandable considering that Black Friday-type sales popped up well before Black Friday.
Nonetheless, the numbers were received as a shock in certain circles because the hype machine had built up big expectations leading into Thanksgiving. According to a consumer poll conducted by Accenture before the holiday weekend, consumer excitement for Black Friday was at its highest level in eight years. Two-thirds of Americans reportedly said they were likely to shop (in stores or online) on Black Friday, up from 55% the year before and just 44% in 2007. Polls from the NRF indicated that some 140 million consumers would shop sometime between Thursday and Sunday of last weekend, and the NRF also forecast that retail sales for the holiday season as a whole would be up more than 4% this year.
There are many theories explaining why the forecasts were wrong and sales during the big shopping weekend failed to impress. They include the following:
There's no sense of urgency. One criticism about stores being open on Thanksgiving is that doing so does not necessarily boost sales overall. Instead, Thanksgiving Day sales simply displace transactions that would have taken place on Black Friday or some other day during the holidays. By pushing Black Friday-type promotions in early November (and at the start of Thanksgiving week and on Thanksgiving itself) and then by following up that big shopping weekend with widespread Cyber Monday deals and weeks of markdowns thereafter, retailers give shoppers the impression that broad discounts are the rule rather than the exception pretty much through all of November and December. Consequently, because deals are a dime a dozen, shoppers have less of a sense of urgency about making purchases on Black Friday or any other particular day.
The Washington Post quoted NRF chief executive Matthew Shay making just this point in a recent conference call with reporters. “Shoppers have changed the way in which they view exclusive deals,” Shay said. "They have this expectation that they’re going to be here all the time.”
There's no mystery as to how consumers developed this expectation: It's come as a result of great deals being made available all the time during the last two months of the year. The widespread feeling among shoppers is: Don't worry about missing out on some supposedly short-lived deal, because when it expires surely another will follow quickly on its heels.
The deals simply weren't that great. With the exception of some extraordinarily cheap doorbuster promotions, the sale prices offered by stores over the past weekend weren't amazing enough to convince consumers that they absolutely must trek or to the mall or pull the trigger on online purchases. Surely, the ubiquity of nonstop deals (see above) has something to do with lackluster excitement on behalf of shoppers. But the increased savvy of shoppers—who are armed with smartphones, who now do price comparisons instinctively, and who are primed to always expect bigger and better deals—factors in as well.
Fewer shoppers assume that stores have their best price on Black Friday nowadays. According to one poll, 70% of Americans said that Black Friday is meaningless because there will be more sales throughout the holidays.” There is also some hard evidence that there's often nothing special when it comes to prices during Black Friday weekend; one study estimated that the average discount on Black Friday was less than 5%.
Whereas in the past shoppers may have made purchases simply because it was Black Friday or Cyber Monday, today's consumers are more inclined to hold off until they see deals that seem so genuinely awesome they cannot be skipped. Sometimes it's glaringly obvious that this is not the case with a retailer's sale. Take the Cyber Monday promotion at Puma's website. It offered 20% off purchases of $75 or more, 30% off orders of $100 and up, and 40% off orders of $150+. Meanwhile, by the time the Cyber Monday deal was being promoted, there was already another Puma promotion circulating on deal-tracking websites announcing that starting on Wednesday, December 4, Puma would be offering all merchandise at 50% off, with no minimum purchase requirement.
Sales forecasts are highly flawed. Barry Ritholz has made an annual tradition out of bashing holiday spending forecasts, including those of the NRF, as well as others from the likes of Forrester Research, which was cited by the New York Times in early November predicting a 13% rise in holiday sales. Ritholz ripped apart such forecasts as "acts of idiocy," because to be accurate, they must take into account factors such as:
• How much income people will earn between now and the holidays, minus their actual expenses, plus their availability of credit;
• The psychology of how much Americans will actually be spending on gifts;
• The weather;
• And any other random events—ISIS, Ebola, Taylor Swift—that may interfere with holiday cheer.
What's more, the forecasts are generally based on the input of consumers, who typically don't have holiday budgets and have no idea how much they spent last year or how much they'll wind up spending this year. Then add in that the poll data is often shaped and presented to the media by retailer interests—notably, the NRF—and what we have is a system that is so highly unreliable no one should be surprised when the forecasts are way off.
In terms of the overall economy, the good news is that the strength or weakness of Black Friday weekend sales is not necessarily an indicator of how sales will shape up for the holiday season as a whole, nor do slumping Black Friday sales mean that the economy is slumping as well.
What dismal Black Friday sales do mean for the rest of the season is that from now on, retailers are under extra pressure to unload merchandise—typically with increasingly more aggressive price promotions. "Every day is going to be Black Friday, every minute is going to be Cyber Monday. You can't let up for a minute because of the competitive nature that is out there," the NRF's Shay said.
Bear in mind that the above comment, like much of the holiday spending survey data that has been proven questionable at best, comes by way of folks who are actively interested in helping retailers boost sales.
What does any of this mean to shoppers who simply want to know when they'll find the best prices on holiday gifts? Pinpointing the optimal time to buy every last item in the worldwide marketplace is impossible, and we're not going to even try. Suffice it to say that there is almost never, ever a reason to pay full price, and that you should use the biggest discounts on Cyber Monday and Black Friday as something of a benchmark. If you know what you want and see prices in the vicinity of what was listed on these big sales days, go ahead and make the purchase without hesitation.
Sure, you could shop relentlessly day after day and perhaps do a bit better, but that's a formula for one seriously stressful holiday shopping experience. To save yourself both time and anxiety, make use of some of the shopping tricks we recommend, including price-adjusting services—which give you money back if goods wind up being discounted further after you bought them.