Black Friday: Economic Boost or Not?
Thursday, November 25, 2010
Traditionally Black Friday is the day that retailers break even for the year. But with the state just barely climbing out of the recession will Rhode Island get a boost from all the shopping or will nervousness about the economy keep people home?
Two economists who spoke with GoLocalProv are predicting that tomorrow will be a good day for retailers. Both men—URI business professor Ed Mazze and economist Leonard Lardaro—expect sales will be about 2 percent higher this year than in 2009.
“People in general have been saving. They have been paying their bills,” Lardaro said. “I think there’s a lot of pent-up demand.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTMazze said people will feel free to start spending again as they become less concerned about losing their jobs. “At this stage, some of the consumer confidence is changing,” Mazze said. “There are fewer layoffs. … That will release people from saving and allow them to spend again.”
Recession has changed attitudes toward shopping
But don’t expect people to go hog-wild either, the economists say.
“People are going to be careful with their purchases,” Mazze added. “People will still exercise restraint—I don’t think it’s going to be a wild rush.”
Thanks to the recession, people’s attitudes towards shopping have changed, according to Mazze. The days of buying things in bulk and squirreling them away in your closet or garage for later use are gone he says. “People will be more frugal with what they buy for themselves—and more generous for their family and friends,” Mazze said. “I think you will find for individuals … I think they’re going to be more careful and they’re going to buy for immediate use rather than later use.”
Mazze says this newfound frugality is related to an increasing tendency to save more money. In recent years, he said the savings rate has gone up as people brace themselves financially for the possible loss of their job. Even though there are fewer layoffs, Mazze said the habit of saving money has taken on a life of its own. “When people see their dollars accumulate they get excited about the fact that it can accumulate more if you just don’t spend foolishly,” Mazze said.
For some stores, Black Friday won’t be enough
Even though sales are expected to go up, Mazze said many retailers will suffer from the fact that shoppers can go online to make their purchases on Monday—the so-called "Cyber Monday. They will also have to deal with costumers who—despite their willingness to spend—will be spending with restraint.
“There are still many retailers that are in trouble and Black Friday will not necessarily get them out of that trouble,” Mazze said.
Photo credit Tim Parkinson
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