What’s Black Friday all about and who is it good for?

Black Friday has three origin stories. The first is about Friday the 13^th, a day superstitious types fear. The second, of course, is the Friday after Thanksgiving in the US. Thanksgiving always falls on the fourth-Thursday in November. The next day, the Friday, kicks off the US holiday shopping season.

The third Black Friday came in 1869. Investors won’t want this to be replicated today as it was linked to the crash of the gold price, which led to a Wall Street crash!

History.com reveals the following on the subject: “Two notoriously ruthless Wall Street financiers, Jay Gould and Jim Fisk, worked together to buy up as much of the nation’s gold as they could, hoping to drive the price sky-high and sell it for astonishing profits. On that Friday in September, the conspiracy finally unravelled, sending the stock market into free fall and bankrupting everyone from Wall Street barons to farmers.

Now let’s go back to today’s Black Friday.

The reason the Yanks first called it this in the 1960s was

 when the city of Philadelphia found the traffic chaos on this first shopping day after Thanksgiving a “black day” for car drivers and the huge crowds going to the shops. It wasn’t until the 1980s that retailers and marketeers explained that many retailers move out of the red (or losses) into profit (or the black) on this day after Thanksgiving, when US consumers start their “shop until they drop” routine ahead of Christmas, Hanukkah and other festive days.

Black Friday now straddles a virtual long weekend that ends with Cyber Monday, when in 2005 the US-based National Retailers Federation revealed that employees used their bosses computers to buy stuff online! Cyber Monday was revealed as one of the biggest days for retail, though it’s likely there was ‘some exaggeration’ ahead of a trend that big stores were trying to promote called online shopping.

Nowadays, shoppers don’t need to use their bosses’ computers to do their shopping. While they now use their smartphones, their employers’ time is probably ‘exploited’ in the age of working from home!

The Daily Telegraph has looked at the Australian experience of Black Friday and here are the main observations:

1. Last year we spent $6.8 billion over the four-day shopping spree.
2. Black Friday is now bigger than the Boxing Day sales period.
3. Some retailers started Black Friday specials in October to beat the rush.
4. Shoppers tend to hold back their spending until Black Friday when there’s more competition on discounting.
5. Retailers are sweating on a big surge of buying after a tough year due to the cost-of-living crisis.
6. Smaller retailers tend to be at a disadvantage compared to bigger rivals when it comes to the size of discounts and the marketing of these good deals.
7. This week’s 3.8% inflation reading and its implication of no rate cuts (or even a rise) in 2026 could reduce the enthusiasm for shopping for consumers with big mortgages.

“Retailers are saying they’re expecting great results, but the … increase in headline inflation this week may reduce consumer confidence,” Queensland University of Technology marketing and consumer behaviour professor Gary Mortimer told the Tele’s Giuseppe Taurello and Sarah Perillo.

Meanwhile, a Xero survey of small business owners found only 39% will do Black Friday sales and a third said rising costs are making discounts undoable.

The Reserve Bank, Treasurer Chalmers and economists will be carefully watching the shopping numbers over the next four days to determine the health of the economy. The high inflation numbers suggest the economy might be stronger than we think, which could increase the calls for an interest rate rise.

If that happens, we might see a very subdued Christmas and Boxing Day sales period that wouldn’t bode well for those small businesses that boycotted the Black Friday sales and then have to face a more despondent consumer before the festive season.