THE WASHINGTON POST doubted that Americans would enjoy the Thanksgiving holiday, announcing on the morning of turkey day that 61 percent of Americans are “anxious about money.” So anxious, in fact, that the very next day between 130 million and 150 million headed to the malls to spend a sum that exceeds the GDP of three quarters of the world’s countries. Wal-Mart alone racked up some $2 billion in sales.
Sure, heating bills this winter will be higher, perhaps by about as much as 40 percent. But many consumers have budget billing arrangements with their utilities and fuel oil dealers, and so they will be able to spread the pain over the year. And sure, consumer debt is rather high, interest rates are rising, and house prices might not be as great a source of increased wealth as they have been in recent years.
But gasoline prices are coming down, stock prices are headed towards record levels, corporate profits continue to rack up double-digit gains, Wall Streeters will find their Christmas stockings stuffed with bonuses fit for the masters-of-the-universe that they think they are, the economy is growing at a healthy clip while inflation remains tame, and most Americans are richer than they have ever been.
So “Black Friday” proved to be a grand day for retailers. That title was developed by retailers not because they are dread the day after Thanksgiving. Rather, Black Friday is a day on which so much black ink is poured on retailers’ income statements that, for them, the blacker the better.
Wally Brewster, a spokesman for General Growth Properties, which owns or operates some 200 malls in 44 states told me that his company experimented by opening four of its malls around the country at 1:00 a.m. By opening time, the parking lots were full. In fact, the lines at Victoria Secret were so long that the store opened 15 minutes early, at 12:45 a.m., and then became so crowded that it admitted new shoppers only as others left. “The early shoppers were there to shop, not just for the fun of it,” said Brewster.
All in all, retailers are exceeding expectations, with price cutters doubling last year’s volumes, and many “hitting plan” for the day by noon on Friday. No wonder Brewster characterized the results of the day as “wild” and pronounced himself “thrilled.”
The hottest items were the electronic items on everyone’s wish list–clothing can wait until closer to Christmas day. Microsoft’s Xbox 360 disappeared from the shelves in the early hours, partly because inventories had been depleted by eager gamesters a few days earlier, partly because Microsoft rushed to market with inadequate supplies in order to beat Sony’s PlayStation 3 to the shelves of the world’s retailers. But the sales will not make Bill Gates any richer, at least not right away: At either $300 or $400, depending on the system, the boxes (really a minicomputer) are being sold at about 40 percent below their cost of manufacture, probably on the theory that made Gillette so successful–give away the razor, and make money on the blades–in the case of the Xbox 360, the “blades” are games and other content. By early yesterday morning, desperate shoppers were bidding $1,000 on eBay for Xbox 360s. One party preferred a non-market route to ownership: in Minot, North Dakota, a young man was mugged for his Xbox as he emerged from a shop at 12:01 a.m.
Other hot items include the large-screen television sets (51″ Toshiba plasma models could be had for $899.99), Razr cell phones, “bath and body items” (cosmetics, fragrances, skin care), and gift cards–which won’t show up in the sales figures until they are actually used by the recipients, typically at the January sales. Luxury items also did well–one 12-year-old girl, daughter of a trader on the New York Stock Exchange, told a CNBC interviewer that she wanted a Tiffany necklace for Christmas. Others appearing on camera were considerably less precocious, and confined their wish lists to the more usual items–cell phones, digital cameras, and the like.
On Monday it will be the turn of the e-tailers–many of whom, of course, also own and operate “real,” as opposed to virtual, stores. These are the “clicks and bricks” merchants who have adapted to the Internet era, many of them rather successfully. The Monday following Thanksgiving weekend is now known as “cyber Monday,” the day on which people who couldn’t find what they wanted in the stores, and people who don’t have high-speed Internet access at home, but do at the office, log on to let their fingers do the walking. Only the Scroogiest of bosses objects, especially at a time when the unemployment rate is low and the labor market increasingly tight. Which is a good thing from the point of view of e-tailers: studies show that the availability of a high-speed Internet connection increases consumer shopping on the Internet by 40 percent.
Irwin M. Stelzer is director of economic policy studies at the Hudson Institute, a columnist for the Sunday Times (London), a contributing editor to The Weekly Standard, and a contributing writer to The Daily Standard.
