Do retailers still find Black Friday worthwhile?

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Listener Ariella Rohr from Raleigh, North Carolina, asks: 

Does Black Friday actually make sense? Is this really any better for companies than having an extended sale season (or just charging a normal price year-round)?

Black Friday may be next week, but some companies have been advertising discounts and promotions since Halloween. 

The holiday shopping season is starting earlier and earlier, said R.J. Hottovy, head of analytical research at Placer.ai, a foot-traffic analytics company. 

Launching these promotions in October and early November allows customers to secure deals earlier on in the year and avoid crowded stores.

On the actual day, some shoppers might get aggressive over scarce items, which means fellow customers might not want to come back to the store for everyday purchases, said Nathan Yang, an associate professor of business administration at the University of Illinois Urbana-Champaign. 

And because items go out of stock, as you would expect, retailers end up with disappointed customers, Yang said.

“Perhaps what retailers ought to be doing is more targeted types of promotion since they have so much data,” Yang said. 

But although the phenomenon of “Black Friday creep” has chipped away at the actual day’s importance, and some might associate the day with in-store brawls, Black Friday still has psychological appeal for many families. 

“I think it is still an important day on the overall retail calendar,” Hottovy said. 

A record 187 million people are planning to shop from Thanksgiving Day through Cyber Monday, according to a recent survey from the National Retail Federation and Prosper Insights & Analytics. 

More than 130 million people are expected to scour for deals on Black Friday alone. 

“While Thanksgiving weekend isn't the kickoff to the season the way it used to be, it is definitely at least the halfway point. And for many shoppers, it's kind of the emotional start to the season,” said Katherine Cullen, vice president of industry and consumer insights at NRF. “For a lot of consumers, it's a time when they get out with friends and family. It's a time that they associate with great deals and promotions.”

Some product categories especially benefit from Black Friday, including electronics, home furnishings, and apparel (to an extent) because people associate them with holiday deals, Hottovy said. 

But, given the financial challenges many families are facing, companies are offering deals earlier in the year to ensure that shoppers do business with them.

“Retailers and those consumer brands want to lock in that sale as early as possible, particularly in what's been an uncertain macroenvironment this year,” Hottovy said. 

While the U.S. economy added more jobs than expected in September, the unemployment rate hit 4.4%, the highest rate since Oct. 2021. High interest rates and President Donald Trump's tariff policies have contributed to a sluggish labor market. 

In this K-shaped economy, where wealthy households make up a greater share of spending, low- and middle-income consumers may continue to be more cost-conscious this year, Hottovy said. 

Since the pandemic, consumer prices have risen more than 24%. 

Sixty-eight percent of shoppers say inflation will affect their Black Friday shopping plans, with 39% planning to spend less, according to a new survey from the loan marketplace LendingTree.

But Hottovy said he doesn’t think lower-income consumers will pull back entirely during Black Friday and the holiday season. 

They might just opt for cheaper items or “stock stuffers” vs.  big-ticket items, Hottovy said.  

“They want to spread joy and happiness with their friends, but maybe they're going to do it in a more thrifty way,” Hottovy said.