Retailers won’t move into the black on Friday

Today is the so-called Black Friday, but that is not the case this year for retailers.

The term Black Friday came about as the day that retailers turn a profit for the year. Moving out of the red and into the black.That is certainly not the case for brick and mortar stores this year. Turning a profit — if it occurs at all — will happen much later in the year for the beleaguered industry.

The evidence of this shift in the profit model is that many large retailers are not offing deep discounts in an effort to save their gross margins.  On a macro basis the pricing discounting this year is six percent less than last year, according to price-tracking firm Market Track.

Perhaps a good barometer on the health of retailers could be assessed by their discounting. The Gap is offering 50% off while Coach’s handbags and leather goods are being slashed by 30% on average.

On the spectrum of savings even Apple is offering gift cards after purchases on Friday.

I believe what we will find at the beginning of next year, that US retailers will be posting losses for the year given the squeeze the consumer feels over depressed wage growth.

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One thought on “Retailers won’t move into the black on Friday

  1. Pingback: Retailers won’t move into the black on Friday via /r/economy | Chet Wang

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