Should we still call it Black Friday?
November 26, 2010 Leave a comment
Should we still call it Black Friday if consumers demand and only respond to deep discounts? Revenue isn’t the only thing, profit matters. In an effort to build sales, retailers have conditioned shoppers to buy earlier, but only at the discount level traditionally reserved for leftover goods at season’s end.
Brief example: A retailer brings goods in and factoring out the cost, freight, shrinkage and other discounts, has a 40% initial gross profit margin. Now, say those goods are on sale on Black Friday at 50% off retail. Add in extra selling expenses (payroll) to handle the extended hours that day, is any profit made? And the big Black Friday sellers, electronics and toys, typically have only an initial gross margin of 10% or less making them even less profitable when discounted.
And so Black Friday, meant to depict the date at which retailers started to operate at a profit, or “in the black”, and incorrectly thought to be the biggest shopping day of the year (the Saturday before Christmas has that distinction) may be more accurately — and awkwardly — referred to as “Continuing-the-red Friday.”
You can’t make that up in volume.