The billions Americans spend annually during Black Friday aids the national economy in a major way, making it a vital fiscal event throughout the U.S.
This year Black Friday sales were down.
The National Retail Federation announced on Monday that Black Friday sales dwindled online and in stores. However online sales statistics that included Thanksgiving through Cyber Monday saw an increase of about 23 percent.
Suman Banerjee, an associate professor in UW’s Department of Economics and Finance, said that the highest sales for American retailers take place in two days every year.
“This when 20 to 40 percent of the retail sales happens, in the weekend not only Friday, you can say black weekend,” Banerjee said.
Banerjee said that the highest sales that took place were in 2012 when Black Friday sales hit $59 billion.
Banerjee said that he expected the sales to be slightly lower this year, “We expect somewhere around 57 to 58 billion in sales this year.”
Almost half of the U.S. population shop on Black Friday, but an increasing number of shoppers are going online.
“About 150 million people pass through checking lines, basically sell counters. Increasingly cyber sales are taking over counter sales,” Banerjee said. “I expect 80 million physical buyers and about 70 million internet buyers. It is little bit below expectations.”
For many students online shopping is preferable to the alternative.
Fahad Habeeb, a sophomore studying petroleum engineering said, “I prefer cyber Monday over Black Friday, it’s more time efficient, I don’t have to stand in lines, I can buy whatever offered in stores without leaving my house.”
Regardless of where sales figures come from, Banerjee said that increased numbers are good for the economy.
“Good numbers really mean good news for the economy, for employment and for the psychological boosting effects for retail business ” Banerjee said.
Banerjee said that U.S. retailers make profits by increasing their sales volume.
“I have seen this for 10 years, increasingly the markups are going down, so the volumes are high but the markups are going down, means the profit margin is going down,” Banerjee said. “They are heavily discounting the goods in order to attract more customers.”
Retailers are accepting low profit margins for two reasons.
“2009 saw a real drop in the sales. In 2010 retailers were worried and started to markup low. As I said in 2012 sales amazingly came back but largely because of volume, low margin high volume is also acceptable,” Banerjee said. “If you ask me a specific reason why low margin is there, it is because the retail sector in the U.S. is extremely competitive and there is not much scope to make mistakes.”
Banerjee believes that Black Friday is economically important because it sets the tone for future business.
“Think about it, 20 to 40 percent of the U.S. retail sales, which is a very large number, happens on Black Friday,” Banerjee said. “So it will add a lot of seasonal employment as well as it establishes a mood for future businesses. It enables businesses to hire more people.”
