Image by Bearman2007 via FlickrIts Black Friday, in recent years called by that name because it is the day that many retailers move into the black in terms of profit. I wonder for how many that will be the case this year.
Of course, most consumers are not concerned with the P&L statements of retailers. They care about deals, and many will go to absurd lengths to find them. They'll get up in the middle of the night (or earlier) and camp out in line outside their favorite retailer so that they can get first pick of the deals inside. Most of the time, this annual ritual is benign enough. However, not always.
This year, an associate was trampled to death at a Wal-Mart in suburban New York. The store was scheduled to open at 5:00am. At 4:55, the crowd could wait no longer. They began to shake the doors, quickly tore them from their hinges, and charged into the store. Even as the Wal-Mart associate lay dying, people continued to storm by. Other associates tried to help him, putting themselves in danger of being trampled as well.
How pathetic! Even in these economically troubled times, that kind of behavior is sad and down-right scary. We all know the power of the mob mentality to turn otherwise reasonable people into something resembling dangerous, mindless, cattle. The New York Times tells the story of 19 year old Nikki Nicely, who, apparently forgetting her last name, jumped onto the back of a man who wanted the same television set to which she had laid claim - all to save $202.
These are the stories that make the headlines. However, there is much more to the story of Black Friday than deal crazed shoppers wreaking havoc. Many retailers, fearing what the drastic drop in consumer spending this year means for them, have cut prices to unsustainable levels. No retailer can survive if they have to sell their products at 50% or more off the retail price. It just won't work. Some retailers likely will not survive this holiday season. They'll focus on selling at whatever price they can get because they need to turn inventory into cash to pay bills. But they will do so at the expense of profit. Then, because their balance sheet is sickly, they won't be able to get the bank loans that they need to continue operations when the holiday season is over. It is not a pretty picture.
Does this mean that we should feel sorry for the retailers? Should we demand to pay full retail when we shop? Of course not. However, lets not be naive enough to believe that there is a free ride here. Americans love to get a deal. And for years, we got that deal - money was cheep and seemingly in endless supply. We created the unsustainable system that now is collapsing around us. Retail will collapse next. Stores will go out of business, more people will lose their jobs, manufacturers will have no one to buy their products, and the cycle will continue.