Do Black Friday & Cyber Monday Still Matter?

Show of (virtual) hands, folks: do Black Friday and its newercousin Cyber Monday deals still matter to consumers – and more importantly, toretail businesses’ bottom lines? Personally, I’ve never seen the point of BlackFriday – I’d much rather loll in my PJs and eat turkey leftovers (after ausually uneventful half-day of trading) with my family on the Friday afterThanksgiving. I guess I see the point of Cyber Monday a bit more: there’snothing like clearing the hurdle of Thanksgiving to make you feel the rushtowards the next big holiday, and the Monday after Thanksgiving is typicallyslow enough that sneaking in a little holiday shopping makes sense.

But this year Black Friday has come under fire, mostlynotably by REI who grabbed a lot of media attention earlier this month whenthey announced they’ll give all their employees a paid holiday on Friday whilekeeping their doors closed to consumers. As Nerdwallet reports, many other retailers includingCostco, Home Depot, Marshall’s, Nordstrom and others will follow REI’s example.

This got me curious about what investing and trading typesthought of these so-called retail holidays. Are they a necessary boon to theretail stocks many of us like to trade? Or a pointless sideshow with littleimpact to the bottom line?

On the pro side we have WSJ’sPaul Vigna. In his article BlackFriday Deals Still Matter, for Retailers and Deal-Crazed Consumers, hesums up the retail holidays’ continued relevance succinctly: “retailers cleanup”. Quoting a report by LPL Financial about the retail sector, he notes:

’The heavyadvertising of discounts would lead one to believe that Black Friday sales areless profitable,’ LPL Financial wrote in a report. ‘However, gross profitmargins for retailers are actually highest during the holiday season.’

Retailers negotiate special prices withsuppliers for Black Friday sales, the firm said, so the hit to margins may notbe as big as you think. Also, and this is an age-old trick, those great dealsare really being used to lure customers into the store, where they’ll beenticed to buy some higher margin items.

TIME’s Money columnist Brad Tuttle begs to differ. In his post Why Black Friday and Cyber Monday ArePretty Much Meaningless Now, he notes that the continued sprawl of holiday deals across muchof November and December renders the supposedly special discounts of those twomagic shopping days a lot less credible. He also remarks that “sales on Black Friday were down roughly 10%last year. According to a new survey conducted for Ibotta, 65% of shoppers ‘believe Black Friday is not as big ofa deal as it used to be.’ Roughly 50% also believe that the best deals will beavailable after Black Friday has passed.”

What’s your take? Did you hit the stores at midnight Friday(or the Interwebs on Monday), or do you find the whole concept meaningless? Andwhat do you make of retail stocks who either lean heavily on the Black Fridayconcept or opt out entirely?

Be Good, DonMontanaroCEO, TradeKing

Follow Don on Twitter and hone your skills at TradeKing All-Stars. You can also followTradeKing on Twitter, Facebook, Google+ or YouTube.

[image: Black Friday & Cyber Monday onFlickr]

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