RSSAnalysis: Is Black Friday truly good for an ailing US economy?
By Scott M. Fulton, III | Published November 30, 2007, 6:37 PM
As the final figures for last Black Friday's and Cyber Monday's sales show positive gains, is this really proof that the US economy isn't as lumbering as the housing market and credit crunch would indicate?
With the price of fuel tremendously higher than anticipated last year, and with inflation starting to creep back into the picture as a result; and with the US housing market in a state of free-fall and the credit markets in a state of crisis, you'd think there shouldn't be a lot of frivolity, gaiety, and merriment in the holiday mood. As it turned out, though, retail spending both offline and online have risen nicely.
The initial analysis said this was because Americans had cash to burn after all, and that the impulse buying habit was alive and well. But a deeper read of last week's and last Monday's data show very different trends: More people shopped smarter, looking for better bargains, and spending less per person.
If you're an economist, you might not be having a lot of frivolity, gaiety, and merriment yourself right now. Because that data might be an indicator -- as it was last year and the year before -- that a big chunk of the holiday spending has already been done.
BetaNews spoke at length earlier this week with AR Communications Senior Vice President Carmi Levy, who follows both consumer and business technology trends. We asked Carmi first, is the data he's seeing from the weekend indicative more of a healthy economy, or a smarter shopper wary of a possibly negative economy?
SCOTT FULTON, BetaNews: Well, I felt flush, but it's a different kind of flush.
CARMI LEVY: You're not as inclined to spend as much on Christmas gifts, or on other discretionary purchases when you are concerned about the value of big-ticket items like your home, when things like your interest rates might be creeping up, when your job might be in jeopardy because the economy is beginning to take a hit because of a weak US dollar and weaker fundamentals.
I believe at some point those broader issues in the general US economy will start to filter through to shopping patterns, both at holiday time as well as throughout the year. So we may be seeing some of that in these initial numbers that shoppers are possibly a little bit more reluctant to spend big dollars on things, and that they are taking their time to research a little bit more this year than they would have in the past, so that maybe as they get closer to December 25, they might score a bigger bargain than they would have looked for in years past.
SCOTT FULTON: Here's something I've never really understood: I guess it may be a presumption on somebody's part, either mine or the economists', but I tend to read for the last few years that whenever there's a prediction of lower sales for consumer electronics, it's that impulse sales are going to be down -- in other words, the kinds of sales that people look at and say, "That's it, I've gotta have it, I'm picking it up today."
Everything I tend to buy in the consumer electronics space myself is a discretionary purchase; in other words, I think about things radically before I'm going to spend forty to fifty dollars on something. I'm going to save every last dollar I can -- it's going to be the best brand, the better performance. And I don't know anyone else personally who is any different. So who are these impulse buyers who walk by and say, "Ah, hard drive! That's it, I'm gonna buy it?"
CARMI LEVY: It's funny, because my affinity group, so to speak, is very much like that. I am like that. I research every purchase, even down to a $30 USB drive, I will research it online and make sure it's the absolute right device for me, and then I will find the best possible price for it.
Part of the research Carmi does involves a certain type of snooping you may be guilty of yourself: going to department stores just to hear the conversations salespeople have with buyers. What he's learned there is an interesting trend -- perhaps just as much a psychological one as an economic one: Since notebook computers have broken through the $750 price barrier, a new class of buyer is susceptible to purchasing them for an altogether new and different set of reasons.
Standing in stores -- this is something that has shocked me time and again, how little input and effort people put into even something as big-ticket as a laptop purchase. They'll just go with it because it looks good, because it looks sleek and sexy, not because the specs meet any kind of business or life need.
SCOTT FULTON: So the people you listen to are as likely to go for that 12 megapixel digital camera on the spur of the moment, as they would a 2 gigabyte HD DVD-based laptop.
CARMI LEVY: That's right, and they'll go for these things because they have a bag that fits it, because it's light enough for them, or because they think it'll look cool when they bring it into the office or when they go to the Starbucks and pull it out and connect to the Wi-Fi. Not necessarily because they even need such a device, especially as prices continue to settle.
The average transaction price for a laptop, for example, continues to come down, and is increasingly the only choice for consumers who buy computers; they don't even buy desktops to the same degree any more.
When a laptop was $2000, it was not an impulse buy. When a laptop is $500 or $600, it absolutely can be an impulse buy, and the price is just low enough that someone might buy it more as a fashion accessory than as a business tool.
SCOTT FULTON: So a laptop computer, then, if that's just as much an impulse buy as anything else, what then happens to the poor desktop computer? I don't know that you show it off as much. I don't know that it's a thing you bring your friends home and say, "Hey, I've got this HP Blackbird 002, isn't this really cool?"
CARMI LEVY: The lack of portability certainly limits your ability to show it off and to brag to friends. You obviously have to be become much more willing to have people in your home.
Next: The "laptop effect," and Wal-Mart's ability to respond
There are a variety of methods and forces that manipulate the market.
Whatever the numbers are presume to be, the adjusted numbers will be provided at a later date when no one is watching for them.
Further, if black Friday was successful, there would not be a plethora of sales ads immediately afterwards.
The bottom line is that people will get tired of being poor because they are manipulated into spending money for "stuff". "Stuff" is costly, space consuming and the stuff we buy today devaluates into worthless junk later.
Unfortunately, "stuff" doesn't pay the mortgage/rent, gasoline, heating oil, food, medical expenses, etc...
I believe that most Americans are much smarter now and realize that "manipulation" is the force that industry and government uses frequently.
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|Bottom line is untill joebob american can't afford a ipod he will buy one. It's not that we all havent felt the pinch of high energy costs or whatever. But we still WANT. And want will outweight anything untill we actually can't afford what we want. And when that happens, god help the government.
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|Americans will gladly go into debt to pay for things they can't truly afford or shouldn't be buying.
Like girls who make $8 an hour who get thier first $500 limit credit card and use it to buy $400 Dolce & Gabanna sunglasses so they can give the appearance of class and wealth without actually having either. (true story, neighbors teenage daughter)
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|That's so sad!
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|She'll learn quick.
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|Considering the current situation in America I highly doubt that.
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|I don't. When the costs start to rise and people can't eat or heat their houses, they quickly learn.
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|You would think so. That is if they're willing to admit there is a problem in the first place.... America is becoming more and more a consumer society that produces less and less of its own. Already America imports more food than it grows for itself.
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|And eventually credit companies will have to stop giving people so much leeway for borrowing cash. The same thing that happened to the housing market is going to happen to the credit market. The laws were changed, however, so bankrupcy protection isn't really much of an option for most of these people.
The country is essentially in for some hard times, starvation, and it doesn't know it. YOu can thank going to war without paying for it (taxes).
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|Some people will never learn no matter how bad it gets. There are some on here who think that what is happening now is a good thing. Not because it may teach some to be more responsible, but that it is making profits. They care not for the long term. Just look at the popularity of SUVs when the price of oil is on the raise. You give them too much credit. (Forgive the pun. :) )
Remember what Bush said about it being every Americans patriotic duty to buy or else the terrorists win.
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|Here's a thought, if these retailers would stock their shelves with reasonably priced merchandise people would buy more year round, rather than just a few weeks a year.
What do I know though, I'm just a consumer that spends a lot of money on merchandise.
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|Well, that's what you're for you know..... After all, profit is everything. You're only truly free when you have an obscene verity of cheap consumer crap, made in China by American companies who have outsourced their factories, to buy. Well, thats what I've been told anyways.
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|Especially when it comes to electronics the margins on the big ticket items are usually very small. It is not uncommon for many of the Big Box store to have a big screen tv or a computer being sold at a loss. Any savvy consumer should be able to find a good deals throughout the year not just during the holidays.
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|Black friday is truly a woman's shopping day. They all get thier sale papers together and make a list of what stores might have what ...
I didnt even leave my house on Black Friday until the early afternnon and that was to take my wife to lunch while the coyotes were at school. First of all, I wouldn't be caught dead running through a store as the doors open like some freak to save a few dollars on any item.
These people are truly idiots who buy things just because they are cheap.
Stores .... once again .... have only a few select items dirt cheap and only a single pallette to sell in most cases.
We just bought a plasma, I didn't need a BF sale to **** over Best Buy once again, just a handful of printed internet prices, 15% off coupons they sent me for for being a RZ member, free gift cards from Best Buy RZ and triple point reward zone vouchers.
I think they lost about $20 on that sale (again). Morons. I know what cost and MAP pricing was going in. If you deduct the sales tax, I ended up getting it for barely under store cost. I slo get RZ points for buying something three times as expensive.
Best Buy banks on the fact they can sell you an extended warranty and a Monster HDMI cable at $164.00 when you buy a TV. I bought nothing, not even the "Best Buy" brand plasma screen cleaning kit for $59 which has a "special" wiping cloth made of some micro mesh garbage and a revolutionary liquid in a spray bottle which I was told could void my warranty if I didnt use it to clean my new TV.
The sales guy told me I wont get a good picture without a Monster HDMI cable. So I asked him what HDMI meant, he didnt know, So I told him ... then I asked how digital information (1's and 0's) travels better over a Monster cable than it does over a $5 eBay cable?
With any digital source, if the datastream is broken for audio or video, you simply dont get sound or a picture. It either gets there or it doesn't, unlike analog which can still play with cable interference, just noisier.
I just love shopping there and taking advantage of retarded teenagers in blue s***s.
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|Like Wal-Mart? The king razor thin margins and no health care for workers to keep costs down? Those people know what they are doing.
As far as the workers go, they knew there was no health care when they fill out thier applications.
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|Hollywood__
Best Buy has good prices and i also collect my reward points, i think what u did buying that plasma was genius XD i wish i could be there when you bought it ... i know they want to shove a warranty and some stupid kit when you purchase something big that happened to me to
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|Though the HDMI cable was an overpriced monster cable. The quality of the monster cabler on a plasma or HD LCD is superior than a 5 dollar ebay special. What you need to do is buy each cable, test them side by side and see the difference. If by chance you do not like the Monster cable, then you return it.
True video and Audiophiles know that the biggest loss of quality in a tv or stereo is in the cables.
Now to the cleaner for the tv. Inside the box on some of the tvs it does state if you use water, glass cleaner or other harsh cleaners on it, it can and will void the warranty if you have an screen issues.
Also save the box, because you will have to mail it to the manufacture in most cases in order to get warranty work done. So that money you saved, is now no longer saved. Read the warranty info carefully folks, manufactures do not cover nearly what they used to due to high costs.
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|Walmart and Best Buy are the last places on earth I'd shop. They are both bottom of the barrel retailers with a history of theft (google geek sqad porn scandal) or hiring illegals (google walmart illegal immigrants).
You saved $20 on a plasma? wooo. I saved $400 on my projector. :-P
Thanks.
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|I didn't save $20 on a plasma, I got it for $20 under store cost if you read my post. Total savings was about $300 dollars. There is no margins for plasmas that are already on sale.
The point is they were trying to push all kinds of expensive add-ons to make up the difference. They offered the Geek Squad installation for $500. I worked for an A/V company installing plasmas, projectors, home automation and security for 8 years. Putting up a plasma and running wires through a wall is a no brainer.
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|Are you telling me 1's and 0's (on and off) travels through a Monster Cable HDMI better than any other cable?
If you were constantly losing picture and sound because of broken bitstreams, then the answer is yes, otherwise you don't know what HDMI truly means and any cable is as good as the next. Loss of picture and / or sound with a cheap HDMI could only mean bad connectors on either end.
Analog - Yes there is a slight difference, Digital - No
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|oic, then good for you on the plasma I must have read it wrong. :-D
Home theaters are cake.
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|Ailing economy? Don't these people know that it is all planned that way? [smiles]
'Tis the season to go further into debt.....
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