Black Friday is a bunch of meaningless hype, in one chart
Posted by Neil Irwin, The Washington Post
November 23, 2012 at 9:58 am
When television news crews and newspaper writers go to cover the holiday crowds, they try to give the festivities some great economic import. Standard aspects of the genre include noting that holiday sales can account for about a third of retailers’ annual sales; cite authoritative-sounding projections from the National Retail Federation about what this year’s sales will be, and perhaps even note that consumer spending accounts for 70 percent of the U.S. economy (conveniently leaving out that most of that spending has nothing to do with gift-giving or holiday cheer).
In fact, sales over Thanksgiving weekend tell us virtually nothing about retail sales for the full holiday season-let alone anything meaningful about the economy as a whole. Paul Dales of Capital Economics analyzed the relationship between retail sales during the week of Thanksgiving against the overall change in retail sales for November through January. As the chart shows, the relationship is a very weak one, with dots all over the grid. But if there is any conclusion to draw at all, the relationship is actually negative!
In other words, strong sales results around Black Friday actually predict slightly weaker holiday sales overall.
Retailers know that a typical family spends whatever it will spend on holiday gift-giving, and that whether that spending comes on Nov. 23 or Dec. 23 doesn’t make that much difference in the aggregate. But retailers aren’t a monolith; they are all chasing market share from the others.
For the media, it is a ready-made story. It takes place at a time that there is little other news, and it is known in advance, so editors and TV news directors can plan in advance for coverage. And there’s no doubt that video of people stampeding through the doors of a Wal-Mart in hot pursuit of a new Wii makes for great television. That is even putting aside more cynical possibilities, such as that media depend on retail advertising and thus have a vested interest in creating a sense of hype and anticipation around an orgy of consumerism.
And what, then, of the people themselves, the consumers who line up with breathless anticipation and make the whole thing possible. From an economists’ perspective, this is a case in which the retailers are using a rationing mechanism other than price to allocate scarce goods: They price a limited number of TVs and other products at a below-market price, and then ration those goods based on who is willing to stand in line the longest.
“I think they want to bring the people here and make them tired,” a man named Saeed Yazdi told my colleagues Abha Bhattarai and Steven Overly Thursday night outside the Best Buy in Columbia Heights. “It’s veiled punishment.” Well yes, Saeed, precisely.
Our elites hate us
Fri, 11/23/2012 – 11:21am
Looking at this video of shoppers at Walmart fighting over Phones I realized how much our elites must really hate us. I am sure that when members fo the Walton family watch videos like this they must laugh.
Walmart does this deliberately. They have a handful of low priced loss leaders, but nowhere near enough to meet the demand. So people line up and fight to be first, because if you are low income, getting one of those low priced items might be your only chance to own one. This is what the elites delight doing, creating situations where we are battling each other frantically for crumbs. It is not just their workers they hate, the Walton family hates their customers, hates everyone with a net worth less than a billion dollars.