It’s one week before we show how US-influenced we’ve become, when we’re bombarded with Black Friday news stories enticing us to spend up big ahead of Cyber Monday, when physical in-store shopping gives way to online chasing for supposed great deals. And while I like to see myself as a cheerleader for business on the basis that it does provide the money for employees to fulfill their material dreams, I’m hoping we see disappointing sales next Friday.
More on this treachery later.
For the moment, let me give you a quick history lesson on this new age retail version of Black Friday. Before the Internet took Australia into a bigger global pond of communication down the information superhighway (as the world wide web was called in the 1990s), the term Black Friday was reserved for Friday the 13th.
However, as we became victims of Facebook, Amazon and other US social media platforms, we started to embrace everything from the Kardashians, Halloween, US sports and, of course, Black Friday sales.
Conventionally, Black Friday is the day after Thanksgiving in the US, which is the fourth Thursday in November each year. On the Friday, which is a public holiday, US shoppers go mad taking up big store discounts, with the day seen as the start of shopping ahead of the festive season.
Most people believe Black Friday got its name because stores would go from operating at a loss or being “in the red” for most of the year to earning big profits over the holiday shopping season, which took their businesses “into the black”.
Businessinsider.com explains that Black Friday got its first retail run in the 1950s in Philadelphia “…when locals resurrected the term to refer to the day between Thanksgiving and the Army-Navy football game. The event would summon massive crowds of tourists and shoppers, putting a lot of strain on local law enforcement to keep everything in line”.
Then in the 1980s, US retailers embraced the term to motivate the then world’s greatest shoppers i.e., Americans, to get them into the malls to shop until they dropped. (I suspect many of our Asian friends could now hold the mantle as the world’s greatest shoppers, judging from the queues outside high-end shops nowadays.)
Cyber Monday got its name because in the early days of the Internet employees would use their boss’s computer on the first day after the Thanksgiving weekend to keep on buying stuff. Now in the age of laptops, tablets and mobile phones, the work computer is no longer a necessary accomplice to the crime of using an employer’s paid time to do your Christmas shopping!
OK, generally I want Black Friday to be big for business and the economy, but with inflation’s last reading at 5.4%, and wages rising at a record rate in the September quarter and the labour market still pretty strong (with 55,000 jobs created in October), we don’t need shoppers to show the Reserve Bank that 13 interest rate rises have had little effect on them.
The next interest rate decision for the RBA is on 5 December. While no one expects another hike, the 6 February meeting could bring another rate rise if Black Friday sales are strong, then pre-Christmas sales are also high, followed by the usual retail, discount madness that follows Boxing Day.
The SMH reports that the “…Australian Retailers Association expects Australians to spend $6.36 billion over the four-day Black Friday sale period alone. But chief executive Paul Zahra said some retailers, worried about the continuing fall in consumer spending, had decided to start their sales early”.
Woolworths and Samsung are already offering pre-Black Friday discounts and we’ll see all manner of retail tricks to get consumers to spend. Retailers will need these tricks as the Commonwealth Bank’s household spending index shows those 13 rate rises are starting to bite. The bank’s data showed “… consumers had reduced spending at furniture stores, appliance stores, luxury boutiques and jewellery stores, which was partially offset by some higher spending on online marketplaces and used and second-hand goods stores”.
I hate doing a “bah humbug” thing for Black Friday and Christmas sales, but I’m worried that 13 interest rate rises on top of a mortgage cliff that hasn’t fully kicked in yet, simply doesn’t need a 14th rate hike in February.
The inflation-killing RBA has to see economic data that says we’re not spending as if there’s no tomorrow, or else tomorrow could be very hard for those with lots of home loan debt to endure.