Will Black Friday Rescue U.S. Retailers?

Traditionally many retailers have viewed Black Friday as the means to pull them out of the red and into the black financially speaking (hence the name), but this year Black Friday is generally being viewed with trepidation as analysts predict that cash strapped Americans will be carefully considering every dollar they spend. Retailers throughout the U.S. have battled through a difficult year, with many going out of business or declaring bankruptcy, so Black Friday has now more than ever before become a light at the end of a long dark tunnel for many businesses relying on consumer spending to keep them going.

With Thanksgiving in the United States taking place on the fourth Thursday in November, the Friday after Thanksgiving signals the beginning of the festive season shopping spree that lasts through to, and sometimes beyond, Christmas. Although not being an official holiday, many shoppers take the day off work to take advantage of the special discounts retailers offer to kick start the season, which may represent up to 50% of their annual turnover. Shoppers are known to queue up right through the night outside the doors of retailers offering the best deals. Retailers open very early, typically at 5 am, and then the mad dash for the best deals is on, with no holds barred and the survival of the fittest taking on new meaning.

With the current economic crisis, Black Friday and the Thanksgiving weekend is set to become a whole new ball game, with some retailers offering up to 75 percent in discounts on a wide range of items. According to a spokesperson at J.C. Penney, its more than one thousand department stores situated in 49 of the 50 U.S. states and Puerto Rico will have “the most compelling Black Friday prices ever offered in the company’s history” over a range of more that 400 product categories. A number of mall operators have reported that retailers were not prepared to wait for Black Friday to open their doors to customers and malls have been obliged to open as early as 9 pm on Thanksgiving Day, remaining open all night.

Another blow to retailers that rely on walk-in trade is that online sellers are capturing an increasing number of consumer dollars. In addition to the special prices being offered online, consumers don’t have to battle through the crowds to get what they want, often at prices lower than they would pay at a retailer, and their purchases are delivered right to their doorstep.

While confidence is growing in many market sectors that the Obama administration will successful navigate the financial storm, the reality right now is that times are tough for consumers and will therefore most likely be tough on retailers on Black Friday and through the shopping season.