Shopping on Thanksgiving day is an offshoot of the Black Friday tradition. Like many traditions the origin of Black Friday is evolutionary at best, but in the 1980s the National Retail Federation (NRF) decided to formally embrace the title Black Friday and encourage more active marketing surrounding the shopping day. Most people believe that Black Friday is the biggest shopping day of the year, but the biggest shopping day of the year has consistently been the Saturday preceding Christmas since long before and after the Black Friday tradition began.
So why all the fuss about Black Friday then?
Market share. The average American will spend $704 on holiday gifts this year, thus each retailer wants to get as large a percentage of that budget as possible, and the sooner the better. Why sooner?
The prices are actually higher earlier in the season and get progressively less expensive closer to Christmas, thus early shoppers add more to the profitability of the store. Door busters and other limited quantity, time-sensitive sales bring many shoppers through the doors, but those loss leaders are offset by higher margins on everything else sold those days. Sales on that last Saturday before Christmas are guaranteed, but also less profitable.
For publicly traded companies this numbers game of time and profit margin has significant impact on their stock’s performance on Wall Street, thus a good Black Friday is critical to the business and their shareholders. Opening on Thanksgiving entered the picture in 2011 and the companies that pioneered the shift saw gains over their competitors. Not in overall holiday sales, which were significantly unchanged for the “Black Thursday” pioneers, but those stores captured a larger percentage of their niche market, which hurt the business of their competitors. Despite some controversy many retailers believe the only way to be competitive in the marketplace is to follow suit.