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November 22, 2010

Behind The Sound Bite: Black Friday

For this edition of Behind the Sound Bite, we’re digging into the facts behind a myth rather than a specific quote. With Thanksgiving just around the corner, the stories about Black Friday are appearing on front pages everywhere. Even though there’s tremendous hype around the day after Thanksgiving as a make-it-or-break-it day for retailers, how big a deal is Black Friday, really? Based on the numbers, it’s certainly significant, but it’s not quite as critical as some headlines make it sound.

Why is it called Black Friday?

According to the website BFads.net, which tracks special Black Friday offers, the name has its roots in accounting. Because retailers do so much business on Black Friday, they are said to be “in the black” from that day forward. In other words, retailers lose money all year until the day after Thanksgiving. While that’s the myth behind the name, most retailers are profitable all year round. Take Framingham-based TJX Cos., which operates TJ Maxx. That company reported a $331.4 profit during the first quarter of 2010, up 58 percent from the same period in 2009.

How much traffic do stores get on Black Friday?

According to ShoppingTrak, Black Friday is consistently the highest traffic day for stores, followed by Super Saturday, or the Saturday before Christmas. On Black Friday last year, shoppers spent an estimated $10.66 billion.

How much do Americans spend in November and December compared to the rest of the year?

Total retail sales in the United States spike at the end of the year. While retail sales average averaged $241 billion per month from January through October in 2009, the average for November and December was $286 billion. That’s a jump of nearly 20 percent.

What’s the outlook for this year’s shopping season?

Overall, ShoppingTrak is predicting that 2010 holiday sales will increase 2.9 percent compared to last year. While that’s good news, it’s not great. By all accounts 2009 was a lousy year for retailers. In fact, sales were down that year by 0.4 percent.

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