Black Friday came to be, because it was typically the day that most retailers moved from being “in the red” to being “in the black” or profitable.  Most retailers could see upwards of 50% of their annual sales between tomorrow and Christmas.  Which, of course, explains why stores may seem so empty the other 11 months of the year.  Funny thing, though, with all the discounting, it doesn’t look like many of the big box merchants are going to see their hoped for profits.  Take 75% off anything, as some clothing merchants are talking, and there’s very little margin left for profit.

At the same time, merchants are drasticaly reducing their workforce to reduce their labor costs.  This will likely mean, even with fewer shoppers, that lines will be long and service poor.  To me, those are the bitter truths that stick with me for the rest of the year and explain why companies like Mervyn’s and Circuit City are going out of business and filing for bankruptcy.  The tighter money gets, the more consumers want to get for their money and that includes service.  If they want lesser service they will go where they expect less – Wal-Mart, TJ Max, etc.

Where this separation between price and quality becomes much more well defined when you drop in convenience, which is why I question the viability of one trick pony companies like Toys R Us.  In economic times like this, it’s impossible to imagine that consumers would go to Toys R Us to buy their toys, as they might have in years past, instead of picking them up for less at Wal-Mart, where they are already buying clothing, household items, and necessities.  Wal-Mart already has a 23% marketshare in the toy business, and in a recessionary market like this I imagine that will pick up considerably as we get through the final few days before Christmas.

So where does that leave us?  My wife will be out there bright and early tomorrow trying to get some good deals, and she’ll be visiting bankrupt retailer Mervyn’s, even knowing that they’re not intending to have any really good Black Friday deals.  She will also be visiting the mall, Kohl’s, and Target.  From past experience, she’ll be coming home with plenty of stuff we need… and quite a bit we don’t, but nobody will accuse our family of not doing our part to prop up the economy this holiday season.

Happy Thanksgiving to everyone – may you day and Black Friday be everything you could hope for.

Ranter