November 29, 2009

So, will we get the makin' money b-rolls for Black Friday?

We had a modest increase of .5%, based on the total spent in retail stores.  As Ed notes correctly, what was spent is not an accurate indicator of how well retailers actually did.  At the end of the day, retailers make their money not on the sale item, but all the other stuff.  Retailers may have sold a ton of stuff, but might not have made as much money as last year.  When you buy a PS3 for some obscenely low price, the retailer did that at a loss, hoping that they're gonna make it up in games, controllers, cables, accessories and warranties, or at least hope you'll buy some other items with a high markup while you're there. 

Also I'd note that individual retailers may have performed better than normal, not because the economy is improving, or that they're kicking ass, but because some of their competitors have folded, or had to shut down part of their operations/locations.  Certain retailers may be getting a bigger slice of pie, but the size of the pie as a whole has shrunk.

I'll say this, don't treat Black Friday as the indicator of how retailers are going to perform.  Watch the rest of the Christmas season, and how much retailers actually made during the season, that'll give you a better idea of where things are.  The amount of money that exchanged hands means a hell of a lot less than actual profits.  If retailers can't get people into their stores without putting out items with massive discounts, and can't get customers to buy items that actually draw a profit, they're gonna be hurting, and will probably put a big chill on the economy as a whole.

Posted by: doubleplusundead at 02:46 PM | Comments (4) | Add Comment
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