Tomorrow will be what has become known as ‘Black Friday’, a made-up holiday that the US has flogged to the rest of the world.
‘Traditionally’ the Friday immediately following Thanksgiving, it is when retailers give huge discounts on goods, causing normally sane, rational people to go mad at the idea of getting 35% off a television that they do not need.
Much like Christmas, it is one of those things that I wish would go away (this year, I have told my children that a Santa’s elf dies each time someone eats a Christmas chocolate before 24 December).
But the question this year is how much of a Black Friday should the world expect, given the current squeezes in the supply chain, resurgent coronavirus in Europe, and inflation?
None of these impresses as being the worst—or best—but let’s start with the supply chain. As we reported last month, multiple market watchers were reporting that the disruption being seen in October was due to worsen.
Moody’s wrote in a note back then that: “As the global economic recovery continues to gather steam, what is increasingly apparent is how it will be stymied by supply-chain disruptions that are now showing up at every corner.”
Germany, for one, saw this a few weeks ago and accordingly cut its own economic forecast from 3.5% to 2.6%. This was due, said Reuters, to: “The scarcity of semiconductors and other intermediate goods, caused by supply chain disruptions because of the covid-19 pandemic and a rise in demand for chips in an increasingly digitalised world, is holding back German manufacturing output. In addition to the supply problems with electronic components, companies are also struggling to meet high demand because of raw material shortages.”
Chips and semiconductors are the things used quite a bit, I assume, in the making of electronics.
So there’s that.
Socially distanced shopping
Coronavirus is also re-surging within Europe. As most know, Austria went into lockdown again this week, along with the German states of Bavaria and Saxony. Christmas markets within those states were also cancelled. While this sounds minor, the Munich Christmas market is expected to host each year three million visitors, so when this is shut down, you truly know that the excrement has collided with the wind-rotating machine.
People tend to go out to shop, despite the best intentions of Jeff Bezos. Fewer excursions mean less shopping. As NTV reported: “The fourth corona wave and rising prices are shaking the mood of Germany’s consumers a few weeks before Christmas. The consumer climate determined by GfK fell significantly in December by 2.6 to minus 1.6 points, as the market research company announced. The propensity to save is rising again, the propensity to buy is declining – and falling to a nine-month low.”
And then there’s inflation, which is like the ghost at the feast. Even though it is generally agreed to be optimal at around 2%, recent reports have been putting it at 4% and, even higher, at 5%. And this week, Berliner Zeitung reported that the chief economist for Commerzbank, Jörg Krämer, told them that inflation is ‘spiraling out of control’.
It can be no surprise then that Forbes reported yesterday that online interest in Black Friday is lower than it has been. This is, wrote staff writer Siladitya Ray, ‘due to underwhelming deals and shortages of in-demand items’.
Ray pulled out a number of items, namely that Google search interest for the term ‘Black Friday 2021’ has been about the same as last year and half that of 2019. Just searching ‘Black Friday’, apparently, brings up the same result. User engagement on articles about ‘Black Friday’ are also apparently down 80%. Meanwhile, the Los Angeles Times reports that the discounts on many goods are ‘significantly’ lower than they were last year due to the mentioned supply chain problems.
There are many that are already lamenting the incoming tepid Black Friday of 2021. The New Republic wrote today: “It would all feel quite routine if it weren’t for the looming sense that covid-19 has conspired to ruin the longstanding American tradition of collectively mobbing the mall.”
There might be some schadenfreude here if this did not have a human cost. According to WKSU, which is public radio news in Northeast Ohio, many small retailers are burning through cash in order to stockpile items. Lisa McGuthry, who owns a boutique, told the station: “Anything can come up, so you want to have a comfortable amount of money in the bank. And so for us, we’ve literally sometimes gone down to our last $1,000 in the bank, just because we need to have this merchandise on hand for the holiday season.”
It would be nice if Ms McGuthry was not beholden to the vicissitudes of the market. And it would be nice if we could go back to a time when buying something for the sake of buying it was not a thing. It now seems like an empty sport.
If Ms McGuthry fails, that impacts everyone above her in the supply chain. It would be kinder and gentler not to put this pressure on people.
Down with Black Friday.