When Black Friday comes
I’ll stand down by the door
And catch the grey men when they
Dive from the fourteenth floor
When Black Friday comes
I’ll collect everything I’m owed
And before my friends find out
I’ll be on the road
——————-Artist: Steely Dan
This is a terrifying day for merchants, who have done some serious praying at their Thanksgiving tables here in the US. It is Black Friday, the day when many accounts go from red (debt) to black (profit), and they are counting on Mr. & Mrs. American Consumer to answer their prayers and change their minds to spend. Two-thirds of American consumers tell pollsters they’re cutting way back on their holiday spending.
It’s breathtaking when you think of it.
Three hundred and thirty two days into the year, retail outlets large and small, survive on either previous savings (equity) or debt (bank loans), to boost their cash flow adequately to arrive at today: Black Friday. Their companies will live or die over the next 33 days, although we may not actually have a funeral for a while longer. Imagine that for a moment.
Now imagine which businesses continue to function each and every day of the year, pretty much with minor fluctuations. These are things we can’t do without, can we? Few of us can avoid a grocery market for longer than a few weeks. Should we decide to cut back our gasoline consumption, we still will more or less return to that black gold at regular intervals, and seasonally, the same applies to heating oil. Our telephone bill will roll in each month, and other utilities, such as public water and sewer, if we need them.
All else (and even some of these) we can choose to live without, at least for another year: and decisions about where we will place our “discretionary dollars” over the next 33 days, will determine the success or failure of the businesses we frequent. All the advertising, all the one-day sales, all the “loss leaders-” that are sold at or below cost- all entice and plead with you to allow them to stay alive one more year.
Small businesses, of course, will be the most desperate, because their cost of “capital” (access to Other People’s Money, sometimes called “OPiuM”) is much higher than large multinational corporations. Even minor setbacks, repeatedly occurring over several months or even years, can dramatically impact their ability to stay afloat, and often doing so means pricing products higher than the big box stores. So as those little shops that used to be a common sight in Hometown America continue to close their doors, what remains will be the big guys able to borrow capital at low interest long enough to survive their competition. At least that’s what happened in normal times. These aren’t normal times.
Best Buy is suffering, even as ailing Circuit City breathes its last breath. (One can tell the condition of a company who advertises to “Doomers” on Life After The Oil Crash…) Deep pockets high on OPiuM allows the walking corpses to continue to function, but this can’t continue indefinitely. Banks and vendors see the writing on the wall, and are disinterested in supporting Chapter 11 bankruptcies. Even many large chains are closing their doors.
I remember walking up and down the isles years ago, buying clothes for children already rich in clothes, and looking around for “inspiration” for adults that suffered from nothing but excess. Even back then, the ritual of gift-buying appeared to be a taxing experience for all but the die-hard shop-a-holic. Weary travelers huddled in tiny tables, around food abundant with salt, fat and sugar, and beverages loaded with caffeine. Parking lots where cars burned fuel driving ’round and ’round hoping only to park. The incessant chant of “holiday music” that would alternatively bring waves of sentimentality or nausea to its listeners. Whispering, in the undercurrents of the muzac, the message: “Buy.” “The perfect gift.” “Easy check-out.”
This is the year, my friend.
The tense smiles of merchants, jumping to attention, while understaffed workers, asking “Can I help you?” The bored look of teenagers, hired as seasonal help. Desperate for solutions, small and medium sized companies turn to consultants who offer “approaches” to the “new frugality” such as training sales staff to “better empathize with their customers” while larger retailers pragmatically cut their employee discounts and deliberately understaff. These “therapeutic” bromides are not grounded in reality, but are instead, a sort of ‘magical thinking,’ that prolongs the inevitable. The undercurrent of genuine panic, of those previous 332 days that were redder than blood, a hole deeper than hell, personal savings on the line, or paychecks foregone, cannot be ignored.
Eleven percent of all US payroll is made up of retail sales workers, and if seasonal help numbers are any indication, these seasonal workers are going to be working harder, and there will be fewer of them. A survey of 1,000 managers by SnagAJob.com found that on average, each plans to hire 3.7 seasonal employees – down from 5.6 last year, while only 20% plan to hire the same number. These workers (express their rage and dark humor online) about having managers read the “riot act” demanding higher levels of customer service, (“Can I interest you in today’s special holiday purchase?”) while cutting back on everything from employee discounts to free coffee. Will employee attitudes shift as retailers continue cutting back on hours? We’ll see.
“Consumers tend to stay with brands they are loyal to and will spend less if they can’t afford it…We don’t see people trading between channels says Coach, Inc.’s Chief Executive Lew Frankfort, but the numbers don’t seem to support their claims. While they are hopeful that consumers will continue to buy their brand names in their retail (rather than discount) markets, albeit fewer items, this may not be a trend that will happen across the board.
Years ago now, Silverstein and Fiske, authors of “Trading Up: The new American Luxury” argued that people have their own peculiar value system as they decide what they will spend money on, and what they won’t. One example includes a working-class guy who spent a lavish sums on golf clubs, but drives a ‘beater’ truck. But the forces that Silverstein and Fiske cite as driving this trend (demographics and cultural factors) may soon shift in dramatic ways. The “average” middle-market American consumer,” they write ” has been transformed into a “sophisticated and discerning consumer with high aspirations and substantial buying power and clout.” (p. 12) That was 2003. Oh what a difference a few years makes.
That same education and aspiration may easily cause today’s families to radically alter their values, leaving marketers scrambling to figure out how to turn “brown” into greenbacks. Past trends such as “conspicuous austerity” in which people spend large sums of money to live a “simple life,” may be replaced by true frugality, expressed simply by one mother as “How many sweatshirts does one kid need?” The terror of the ad men, of course, is the start of genuine “Tipping Point,” begun by trendsetters, who are arguing that fashion basic “must haves” are best bought second hand, and brought the term “dumpster diving” into the cultural lexicon.
To meet this demand for credit-strapped customers, “lay-away” has re-emerged, with an updated cyber twist.
They’ve examine their credit card bill, and how the balance creeps up and up. They’ve opened their 401k’s and found them to be 201k’s. Their neighbors can’t sell their homes, even for the “ridiculously low” prices they are asking for them, and they realize, as they never did before, that “potential” wealth, in the form of ballooning housing values, can disappear in a season. And the relief at the gas pump doesn’t reassure tremendously. They are going to have a lean year. They are going to have to figure out how to demonstrate their love in some other way this holiday season.
How the people of the US (commonly called “consumers”) decide to spend or not spend their cash will dramatically shape our future landscape. Should they fall prey to the new hype of “recession chic” and “recessionista,” terms introduced into the lexicon to explain the introduction of scaled-back versions of outrageously priced “high fashion,” and living up to the demands of “high fashion” on a low budget remains to be seen.