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Black Friday

Definition

Black Friday refers to September 24, 1869, when the U.S gold market crashed. It is unrelated to the current shopping holiday celebrated post-Thanksgiving. Now, it commonly refers to the Friday after Thanksgiving when stores offer sales and discounts to kick off the holiday shopping season.

Phonetic

The phonetic spelling of “Black Friday” in the International Phonetic Alphabet (IPA) is /blæk ˈfraɪdeɪ/

Key Takeaways

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  1. Popular Shopping Event: Black Friday is one of the most popular shopping events of the year, occurring the day after US Thanksgiving. Consumers eagerly await this day due to the significant discounts offered by retailers.
  2. Deep Discounts: Both online and brick-and-mortar stores offer substantial discounts on Black Friday. These discounts can be on a wide variety of products ranging from electronics, home goods, clothing, and much more.
  3. Kickstart to Holiday Shopping: Black Friday marks the unofficial start of the holiday shopping season. Many consumers utilize this day to purchase their holiday gifts at discounted prices.

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Importance

Black Friday is a significant term in the business/finance context as it marks the beginning of the holiday shopping season and is considered a pivotal economic indicator. It falls on the day after Thanksgiving in the United States and is associated with substantial sales and promotional deals offered by retailers. Also, it is considered “black” because it traditionally allowed retailers to earn a profit and move their accounting records from the “red” (losses) into the “black” (profits). The consumer response on this day often provides a forecast of the overall health and expected activity of the retail sector for the entire season, thereby being an influential factor for business decisions and financial market expectations.

Explanation

Black Friday serves a significant purpose in stimulating consumer spending to boost the economy. It officially initiates the holiday shopping season, a crucial period for retailers and businesses, as it often signals the point when companies start to make profits or “go into the black”. Traditionally held the day after the American holiday of Thanksgiving, retailers offer steep discounts on a variety of products to attract customers. Many shoppers eagerly anticipate this day to make large purchases like electronics, appliances as well as holiday gifts, utilizing the significant discounts offered.Moreover, Black Friday has evolved beyond a one-day event into a week or even a month-long affair, with many businesses starting their deals early. It allows businesses to clear out their existing inventories and make way for new products, which further fuels production and commerce. It also encourages customer loyalty and provides a platform for businesses to showcase their new products or refreshed models at an attractive price. In essence, Black Friday serves as a strategic business approach for enticing consumer spending, which subsequently contributes to economic growth.

Examples

1. Walmart Black Friday: One of the largest and most well-known examples of Black Friday can be seen in Walmart’s Black Friday sales. In 2021, to adapt to changing consumer behavior due to the Coronavirus pandemic, Walmart divided their Black Friday sale into three different event periods throughout November. They offered steep discounts on a variety of products both in-store and online to maximize revenue and customer acquisition.2. Amazon Black Friday: Online giant Amazon is another great example of the application of Black Friday in the business world. They usually conduct a week-long Black Friday sale, offering daily deals on a wide range of products. The strategy often results in a significant boost in their fourth quarter sales.3. Apple’s Black Friday: Apple, typically known for their limited discounts, take part in Black Friday offering gift cards and small discounts on their popular products, including iPhones, iPads, Macbooks, and Apple Watches. In 2021, instead of direct discounts, Apple gave away up to $200 gift cards with certain product purchases. This approach helps to drive sales while maintaining their premium branding.

Frequently Asked Questions(FAQ)

What is Black Friday?

Black Friday is the day following Thanksgiving in the United States and is often regarded as the beginning of the country’s Christmas shopping season. This day sees many physical and online retailers offering significant sales and discounts to kick-start the holiday shopping season.

Why is it called Black Friday?

The term Black Friday originates from Philadelphia, U.S.A., where it was originally used to describe the heavy and disruptive pedestrian and vehicle traffic that would occur on the day after Thanksgiving. It was later associated with the practice of recording losses in red ink and gains in black. Hence, Black Friday indicates the point in the year when retailers begin to turn a profit.

When does Black Friday happen?

Black Friday occurs annually on the day following Thanksgiving Day in the U.S., which is the fourth Thursday of November.

How do companies benefit from Black Friday?

Companies often see a significant increase in sales on Black Friday. The reduced prices are intended to attract shoppers, and the increase in volume typically makes up for the discounted prices, leading to higher profits.

Are the best deals always on Black Friday?

While Black Friday sales often feature significant discounts, it doesn’t necessarily guarantee the best deals. Some products might see bigger price drops at other times of the year. It’s important for consumers to do proper research and price comparisons.

Is Black Friday only restricted to the U.S.?

No, while it originated in the U.S., the Black Friday phenomenon has spread to various other countries including Canada, the U.K., Australia, and more, often coinciding with local end-of-year sale events.

How does Black Friday impact the stock market?

While Black Friday itself may not have a direct impact on the stock market, the sales results can be a good indicator of the overall health of the retail sector and consumer spending habits. Strong Black Friday sales can sometimes lead to a rally in retail stocks.

Is it safe to shop on Black Friday?

Yes, it is generally safe to shop on Black Friday provided shoppers exercise caution. This includes both being aware of physical safety in crowded places and taking precautions while shopping online – like ensuring websites are secure and avoiding potential scams.

Related Finance Terms

  • Consumer Spending
  • Black Friday Sales
  • Discounts and Promotions
  • Retail Industry
  • Online Shopping

Sources for More Information

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