Explainer-What is Black Friday? And will shoppers find bargains this year?

By Juveria Tabassum, Savyata Mishra

(Reuters) -Retailers are preparing for what they hope will be yet another record-setting global shopping spree on Black Friday, the fourth Friday of November, which this year is Nov. 24.

Known for crowds lining up at big-box stores to pounce on doorbuster discounts during the early hours after American Thanksgiving, Black Friday normally marks the unofficial start of the Christmas shopping season.

Retailers in the U.S., Europe and elsewhere will be trying to cash in on the hoopla. Here is what to expect from Black Friday 2023.

WHY IS IT CALLED ‘BLACK’ FRIDAY?

Starting around the 1960s and early 1970s, police and bus drivers in Philadelphia used the term “Black Friday” to refer to the chaos an influx of people to the city created before the Thanksgiving weekend. Visitors would trawl the stores in Philadelphia on Friday with their Christmas lists looking for gifts. Shoplifting and parking violations ensued.

Department stores re-branded the term to “Big Friday” to put a more positive spin on it. But the name did not stick, and since the 1980s retailers began to describe Black Friday as the day when their retail ledgers are allegedly “in the black,” or operating at a profit, as customers start holiday shopping, according to Marcus Collins, a marketing professor with Ross School of Business, University of Michigan.

“What we know is Black Friday, because it’s so ceremonial, we get more people participating in it,” Collins said.

WHAT ARE RETAILERS’ PLANS THIS YEAR?

Retailers including Best Buy (NYSE:), Macy’s (NYSE:), H&M (ST:) and pure e-commerce retailers like Shein and Temu are already touting early Black Friday “deals” of up to 30% off on some limited merchandise online and in stores.

Such early promotions could help them measure shopper demand and avoid product shortages, which could be a big problem this year. Water levels in a key shipping artery, the Panama Canal, have dropped due to a severe drought, cutting the number of ships carrying merchandise through it.

Many retailers in the U.S. intentionally muted their holiday hiring plans. Labor shortages are also a challenge for retailers in Europe, meaning shoppers could find fewer staff to help them.

ARE BLACK FRIDAY CROWDS LIKELY THIS YEAR?

Around 130.7 million people are planning to shop on Black Friday this year, according to data from the National Retail Federation (NRF). Thanksgiving weekend, which encompasses Black Friday and Cyber Monday – the Monday after Thanksgiving – is typically the busiest shopping period in the United States.

But Dana Telsey, CEO of Telsey Advisory Group, said Black Friday itself will not be as important this year. With Christmas falling on a Monday, the “procrastination factor (is) even greater because shoppers can wait until Saturday or Sunday” before Christmas to get gifts, she said this week.

Throughout the holiday season, in-store traffic is expected to fall slightly this year, dropping by 3.5% compared to last year, according to retail analytics firm Sensormatic Solutions.

Wet weather, which deterred in-store traffic in some parts of the U.S. last year on Black Friday morning, is largely not expected this year, according AccuWeather.

Although most U.S. stores will be closed on Thanksgiving again this year, opening for shoppers at 5 a.m. or 6 a.m on Friday, some retailers are advertising discounts online that kick in starting at 12:01 a.m. on Thanksgiving.

Among them is Kohl’s (NYSE:), which is promoting what it calls a “Super Deal” on Thanksgiving and Black Friday on products including Beats Studio Buds wireless noise cancelling earbuds for $89.99, from the regular price of $149.99.

Retailers big and small are touting online ordering and curbside pick-up this year for the convenience of shoppers who want to avoid stores. In the past decade, Americans’ Black Friday purchases online have more than tripled, reaching $9.12 billion on the day last year, according to data from Adobe (NASDAQ:) Analytics.

WILL SHOPPERS FIND BLACK FRIDAY DEALS THIS YEAR?

Several major retailers from Dollar General (NYSE:) to Walmart (NYSE:) and Macy’s could be saddled with too much stock for a second straight year, according to a Reuters analysis. They likely will need to offer discounts in order to drive shoppers to their stores and websites.

Even ahead of Black Friday, research firm Jane Hali & Associates said discounts at Kohl’s and Macy’s were as high as 60%, with foot traffic lower at these two retailers and Nordstrom (NYSE:) compared to last year.

Adobe said online discounts were expected to be as steep as 35% on toys, 24% on sporting goods and 19% on furniture.

HOW MUCH ARE SHOPPERS EXPECTED TO SPEND?

Holiday sales online and in U.S. stores are expected to rise between 3% and 4% during November and December, their slowest pace in five years, according to a forecast by the NRF.

Spending online during Black Friday is expected to rise 5.7% to roughly $9.6 billion, according to Adobe Analytics.

In the United Kingdom, online spending during Black Friday is expected to rise 4.5% to 1.05 billion pounds ($1.30 billion), with total sales over the Cyber Weekend reaching 3.8 billion pounds, according to an Adobe forecast.

WHAT ARE RETAILERS DOING TO ATTRACT HOLIDAY SHOPPERS?

With student loan payments returning, and costs of housing and essentials pinching household budgets, analysts believe retailers will have to rely on promotions and early offers to stay afloat this holiday season.

Consumers were looking to make the most of promotional events and wrap up their shopping in just 5.8 weeks this year, when compared to a 7.4-week window pre-pandemic, according to data from Deloitte.

WHAT ITEMS ARE HOT FOR BLACK FRIDAY THIS YEAR?

IPhones will be hot again, with the recent launch of the iPhone 15. Last year, shoppers looking for Apple (NASDAQ:)’s iPhone 14 Pro and iPhone 14 Pro Max returned empty handed as the technology company struggled with production snafus in China.

Electronics are expected to be the top pick this shopping season, with estimates of a 6% growth, according to a report by Mastercard (NYSE:).

Best Buy kicked off its Black Friday deals in late October with offers such as its Play Station 5 for $499.99 bundled with either “Call of Duty: Modern Warfare III” or Marvel’s “Spider-Man 2”, though the retailer on Tuesday forecast a bigger decline in annual comparable sales and pointed to “difficult to predict” consumer demand.

Skin and hair care products remain popular, with Ulta Beauty (NASDAQ:) offering up to 40% discount on CoverGirl and Lancome mascaras, Bobbi Brown concealers and select products of its own label.

WHAT ARE RETAILERS SAYING ABOUT THIS YEAR’S BLACK FRIDAY?

Macy’s CEO Jeff Gennette on Thursday said the competitive landscape has shifted to Black Friday deals prior to Black Friday. “We’re in the midst of that along with our competitors, customers are taking advantage of that.”

Mattel (NASDAQ:) President Steve Totzke told Reuters on Monday that he is expecting a strong Black Friday and run-up to the holidays even as the toymaker warned of slowing demand for the toy industry last month.

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