Kendall Schoenike
Mr. Reuter
Economics
24 October 2016
Black Friday
Though Thanksgiving still is about a month away, black friday weekend has already filled the minds of consumers. With the holiday season comes the shopping season, and it is a quite significant season to our economy. The term black friday was coined back in the 1960’s but the day has grown remarkably since. The unofficial holiday has brought crazed consumers to wait in tents for doorbusters, or stay up all night shopping for christmas gifts. I have to admit, I myself have left Thanksgiving dinner early to camp out in line for the greatest laptop or television deal. The slashed prices from suppliers drives consumers to want to buy more and more of the products. Black friday and the holiday shopping season have grown to be so popular because of the economic benefits to both consumers and retailers.
In 2015, 102 million people shopped in stores on black friday weekend, spending an average of three hundred dollars each. That’s just in stores, online shopping adds an immense amount of shoppers on black friday as well. The most shopped for items during black friday are electronics and popular toys, but almost everything is discounted from clothing to furniture. The discounted price of these products causes an increase in quantity demanded, and it moves along the demand curve. There is also a shift right in the demand curve during black friday because of the increase in advertising and a change in the number of consumers in the market. However, if you were to look at the demand curve now for these products, a month out, you would see a shift left. This is because of consumer expectations for price. Since, we are all awaiting the drops in price for retail products, we aren’t willing to pay as much for them now. If we don’t think the price is low enough, we will simply wait for black friday to kick of the holiday season. 
I wondered how do the producers benefit from the holiday season if all of their prices are slashed. It’s pretty simple. Since the prices are lowered, consumers come and buy more, and buy things they wouldn’t usually buy if they weren’t on sale. In 2015, consumers spent a total of $626.1 billion during the holiday shopping season. They retailers are getting such a larger demand at the cheaper prices, and their income far outways the products costs, making them profit. Basically suppliers are willing to sell their products at lower prices, because of how high the demand is.
The National Retail Federation says that holiday sales are expected to increase an additional 3.6 percent this year to $655.8 billion. In addition to that retailers are expected to hire between 640,000 and 690,00 seasonal workers in 2016 to help with the madness. We can see that increase in jobs is yet another benefit of the holiday shopping season.
Now with black friday fast approaching we have to ask ourselves an important question. Is going black friday shopping and saving money worth the opportunity cost of spending precious time with your family? It’s a trade off. The marginal benefit is saving a little money with the sales that the holiday season offers and the the marginal cost is taking away time with your family during the holidays. Does the marginal benefit outway the marginal cost? Probably not.
"NRF Forecasts Retail Sales to Grow 3.1 Percent in 2016 ..." N.p., n.d. Web. 24 Oct. 2016.
"The History of Black Friday." N.p., n.d. Web. 24 Oct. 2016.
"What Is Black Friday: Sales Statistics and Trends." N.p., n.d. Web. 24 Oct. 2016.
I can relate because I also participate in black Friday shopping. I love to go shopping on black Friday because of all the great deals, so that I can save money when buying Christmas gifts for my family and friends as well as items for myself. I'm sure this is what drives every other consumer to wait for hours to get into a store and leave thanksgiving early. I never really realized how much economic benefits that black Friday brought in. I figured that it brought in a lot of money but it was a little surprising that approximately 102 million people spend $300 each. Not only is this great for producers but it is also good for consumers since they are saving money. It is a win-win situation for both the producer and the consumer.
ReplyDeleteI was surprised when reading this because I didn’t expect black friday shopping to bring in that much of a profit. Also how much an average person spends while shopping. Yes it’s good for both the consumers since they are saving money but also the producers because they can make a better profit with all the deals happening. I can personally say that I have gone black friday shopping and can see why people wait in lines for hours before the stores even open. However I don’t think people should leave Thanksgiving early just to stand in a line and wait for the store to open. When I go I either go after my family is done with Thanksgiving or go early in the morning.
ReplyDeleteWhile I'm not one to leave the Thanksgiving table to save a few dollars, I am definitely one that goes out on Friday. I know that I spend a lot more money than I would any other day, so I'm guilty of falling into the Black Friday Deals trap. I agree that the insane amount of popularity surrounding Black Friday really helps to drive up the amount of consumers, but the low prices also encourage them to spend more than they would otherwise. More and more often now I am beginning to see people taking advantage of the online shopping because it is quick, convenient, and they can stay at the Thanksgiving table without having to leave to save a little bit of money. So not only are stores smart enough to drag in millions of customers, they also have an online database which consumers can purchase from on Thanksgiving without having to leave the table. I think this helps to eliminate some of the opportunity cost surrounding Black Friday, and only helps to benefit the consumer and the producer.
ReplyDeleteI agree with you, it helps increase revenue for companies and business. Which overall impacts the economy. While increasing revenue is important, Black Friday also gets companies and business to hire people. This little "holiday" benefits our economy a lot more than what I had originally thought. Out of the 100% of annual retail sales, Black Friday alone brings in 30%. So one day one out of the whole year, brings in almost a third of annual sales. Out of the 74.2 million people I have never gone Black Friday Shopping therefore I don't really understand all the hype about it. My family and I are more about that cyber Monday, which is just as effective but also a little slower than going out and shopping. For some people they may not even consider the marginal benefit and cost. Them just may look at one side, being the marginal benefit. Because you're leaving your family at Thanksgiving. Which is a decision the consumer has to make. Overall, like Isabelle said it is a win-win for the consumer and the producer.
ReplyDeleteAlthough I myself have never gone shopping on Black Friday, from the fear of being stampeded by a crowd of people. I can relate to people who have gone out shopping on Black Friday because of how tempting it is so buy a laptop that would normally cost over a thousand and then have it cost only a few hundred.
ReplyDeleteBlack Friday makes companies lower the prices on items that are usually on sale and make it better and also lower the prices on items that aren’t usually on sale. So a bunch of people will get in lines just to get the items that aren’t usually on sale even if they will hardly use that product they will just want it because it’s on sale. Which will allow the companies to make more profit on each item on sale despite the lower prices.
ReplyDeleteBy ensuring that these incredible sales deals come by once a year, businesses can spend months advertising savings and create an awareness and an excitement for these opportunities. The incredible increase in demand ensures that producers will still make a profit from the price cuts. What I found most surprising was the amount of seasonal employees hired for the holiday season and Black Friday. Personally, I don't know if I would accept a job if I knew it was going to be so short-lived.
ReplyDeleteI would agree that the marginal benefit of Black Friday does not outweigh the marginal cost, especially since there are plenty of good sales throughout the month following it. People seem to forget that fact, and treat Black Friday as an end all be all, when really it is just a trend that people buy into. But, that trend helps to push the demand curve to the right on Black Friday every year.
ReplyDeleteI'm not much of a shopper in general, so Black Friday has never really appealed to me at all (that and the fact that there are a lot of crazy shoppers, and I don't want to be trampled in the storm of people or fight someone to save money on some product). Having said that, it surprised me that there was as much revue the companies received that you stated. It reminds me of Valentine's day profit stores get to be honest. People spend far too much in my opinion for both Black Friday and Valentine's, yet they're still important days because the amount of things people buy helps keep our economy stable. Black Friday has become a necessity for our economy based on the sheer fact that people spend as much as they do.
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