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How have the pandemic and online spending affected Black Friday shopping? Analyzing retail trade margins 2009–22

By Ian Schaaf

Black Friday and the subsequent weekend are among the biggest shopping events in American retail. The holiday season accounts for around 19 percent of retailers’ annual revenue and serves as a general barometer of consumer confidence in the economy.¹ The Black Fridays of old, however, have undergone a major transformation. Single-day deals and lines stretching around the block are becoming a thing of the past. Black Friday has grown to a weekend-long occasion culminating in Cyber Monday—an online-focused shopping event. And since the onset of the COVID-19 pandemic, retailers have altered the duration and timing of their holiday sales. This Beyond the Numbers article will explore how Black Friday has changed over the years by using Consumer Price Index (CPI) and Producer Price Index (PPI) commodity indexes to analyze prices. We’ll look at how the COVID-19 pandemic has impacted Black Friday, and how the continuing growth of online shopping has affected the holiday shopping season.

History of Black Friday

Traditionally, in the United States, the Macy’s Thanksgiving Day Parade, inaugurated in 1924, kicked off the holiday shopping season.² Historically, retailers agreed to not advertise Christmas sales until Thanksgiving Day was over. In 1939, President Franklin D. Roosevelt moved Thanksgiving Day from the last Thursday to the fourth Thursday of November to extend the holiday shopping season.³ The origin of the term “Black Friday” describing the shopping day after Thanksgiving Day is unclear, but this name likely reflected the day’s unique standing as the official start of what retailers hoped would be a busy shopping season. Regardless, data from the U.S. Bureau of Labor Statistics (BLS), and other sources, can be used to explore the effects of Black Friday on retailers and consumers.

Measuring Black Friday by looking at margins

BLS publishes multiple CPIs and PPIs covering the sale of consumer goods. The CPI program measures changes in the prices urban consumers pay for goods, while the PPI program calculates retail trade indexes that measure changes in gross margins, the differences between selling prices retailers pay for goods and purchase prices they pay to acquire goods.

Retail trade PPIs measure the changes in revenue for the services retailers provide while facilitating the sale of goods—services such as marketing, storing, and displaying goods in convenient locations and making the goods easily available for customers to purchase—not changes in the selling prices of goods. Margins can vary widely by industry. For example, retailers selling homogenous, commodity-type goods, such as groceries, tend to have lower margins than retailers selling specialized or customized goods, such as tailored suits. Furthermore, PPI commodity indexes track the average changes in prices for specific products or groups of products, irrespective of industry of origin. For example, the PPI commodity index for alcohol retailing tracks changes in gross margins for wine and other alcoholic beverages regardless of whether these goods are sold by a grocery store, a liquor store, or a convenience store.

The analysis that follows covers the period from 2009 to 2022. To examine the effects of Black Friday on retailers, this article will analyze three PPI commodity margin indexes for consumer goods retailing that are typically popular around the holidays, as shown in figure 1. Unless otherwise stated, all data are not seasonally adjusted.

Figure 1. Selected commodities to analyze Black Friday holiday shopping season

Commodity index abbreviation	Producer Price Index commodity margin index full title
Televisions1	TV, video, and photographic equipment and supplies retailing
Apparel2	Apparel, jewelry, and footwear, and accessories retailing
Computers3	Computer hardware, software, and supplies retailing
1 For data on televisions, see https://data.bls.gov/timeseries/wpu585%26output_view=pct_1mth?from_year=2009. 2 For data on apparel, see https://data.bls.gov/timeseries/wpu583%26output_view=pct_1mth?from_year=2009. 3 For data on computers, see https://data.bls.gov/timeseries/wpu584%26output_view=pct_1mth?from_year=2009. Source: U.S. Bureau of Labor Statistics.

According to PPI margin indexes, when does the holiday shopping season start?

Historically, margins have generally increased throughout the summer as retailers either raised prices or reduced discounts. Margins would peak and begin to transition in November in anticipation of holiday price cuts that happened after Thanksgiving Day and in December. By Black Friday, inventory acquisition prices were set, resulting in decreases in margins and declines in the PPI retail trade indexes. CPI data on retail prices also provide evidence of the discounts offered to consumers.⁴ After the holiday shopping season concluded, retail prices, and consequently margins, tended to rebound in the new year.

Shifting November margin trends

From 2009 through 2022, trends for PPI margins have changed over the holiday shopping season. From 2009 through roughly 2015, retailers of televisions and computing products tended to delay price rollbacks until after Thanksgiving Day, while apparel retailers typically began discounting prices earlier in November. In contrast, since 2016 margins for all three of these product categories have mostly declined in November. Table 1 indicates whether margins for televisions, apparel, and computers increased or decreased in November and December for 2009 through 2022.

Table 1. PPI directional changes for gross margins tracking retailing of televisions, apprael, and computers, for November and December 2009–22, not seasonally adjusted

Year	Televisions, November 1 month percent change	Televisions, December 1 month percent change	Apparel, November 1 month percent change	Apparel, December 1 month percent change	Computers, November 1 month percent change	Computers, December 1 month percent change
2009	-4.9	-7.4	-2.0	2.1	2.0	1.2
2010	2.0	-12.8	-1.9	-1.6	5.5	-4.2
2011	0.0	-0.4	2.4	-3.7	0.2	-1.9
2012	-6.9	-6.2	-2.2	-2.1	1.5	4.2
2013	10.5	-32.9	-5.2	-2.8	3.4	-2.4
2014	-5.0	-29.9	-6.8	1.9	-0.9	1.5
2015	5.9	-29.1	-6.4	-1.9	-2.2	1.1
2016	-12.1	19.9	-5.1	-5.1	-0.5	-1.2
2017	-14.0	-4.9	-4.7	-2.7	-0.4	-1.3
2018	-22.1	14.7	-4.5	-2.7	-4.8	0.8
2019	-14.9	3.4	-5.5	-2.8	-3.1	0.6
2020	-13.4	10.0	-4.0	-2.7	-1.8	0.6
2021	-12.1	1.5	0.3	-2.0	-8.3	4.9
2022	-11.4	-5.9	-4.4	-0.3	-6.2	0.6
Source: U.S. Bureau of Labor Statistics.

Television margins and the Black Friday doorbuster strategy

From 2009 to 2015, margins for televisions were mixed in November, but decreased in December. By 2016, marketing patterns had reversed. From 2016 to 2022, margins decreased substantially in November and generally increased in December. Holiday-related discounting for televisions and related equipment had shifted back to early November (See table 1.)

For Black Friday and during the holiday shopping season, televisions are widely advertised and promoted with steep discounts. In the month of November, consumer prices for televisions declined an average of 2.3 percent from 2009 to 2022, and an average of 3.1 percent from 2016 to 2022.⁵ This “doorbuster” strategy is intended to draw in shoppers, hoping that they will make additional purchases of less discounted goods, extended warranties, or other add-ons that have higher profit margins. Over the entire 2009 to 2022 period, margins for televisions decreased an average of 8.0 percent in November. From 2016 to 2021, the average November decline in margins was an even larger 16.2 percent.⁶ With such steep discounts and declines in gross margins in November, it is not surprising that they were short-lived; in comparison, the December margins only decreased twice from 2016 to 2022.

Margin declines accelerate for apparel during Black Friday shopping season

Since the start of PPI margin index coverage of trade commodities in 2009, margins for apparel have declined nearly every November. Margins decreased in November by an average of 3.6 percent over this period, while retail prices declined by an average of 1.9 percent.⁷ In addition, declines in margins and consumer prices have grown larger from 2009 to 2022. In contrast to televisions, apparel margins typically continued to fall in December. Some of this discounting is intended to entice shoppers, but discounting also serves to remove excess apparel inventory in anticipation of updates to apparel lines for the upcoming season and year.

These continued declines in December occur because apparel styles and trends are always in flux, as clothing appearance and function shift season-to-season and year-to-year.⁸ New merchandise lines generally are introduced early in the calendar year, requiring retailers to clear holiday season inventory ahead of the new year. Apparel margins typically rise in February and March, and also increase in early fall, before the cycle of holiday discounting begins again.

Computer margins hold steady in December

From 2009 through 2013, computer retailers consistently increased margins in November to increase profits entering the holiday season, while adjusting margins in December depending on variations in sales and inventory. Beginning in 2014, computer retailers began offering deep discounts beginning in November, resulting in lower margins. In addition, by 2018 computer retailers were consistently reducing discounts and increasing margins in December as the holiday shopping season approached its conclusion.⁹

Impact of the COVID-19 pandemic on Black Friday sales and the growth of online shopping

The Covid-19 pandemic resulted in huge growth in online shopping. Following the start of the COVID-19 pandemic, retailers scrambled to enhance their online retail presence. In the second quarter of 2020, online sales revenue grew 32 percent from the prior quarter—the largest quarterly increase on record. Online revenue as a share of total retail revenue grew from 11.9 percent to 16.4 percent. (See chart 1.) Despite increases in online sales, total retail sales fell 4.2 percent between the first and second quarters of 2020.¹⁰ The share of online sales as a percentage of total retail revenue has declined slightly since the second quarter of 2020; however, online sales remain well above pre-pandemic levels.

Retailers modify marketing patterns in response to changing sales dynamics

By the fall of 2020, in response to declining in-store and overall retail sales, retailers began offering new incentives to increase in-store foot traffic. In addition to public health accommodations, retailers rolled out new shopping formats, such as buy-online-pickup-in-store ordering and curbside pickup. The new formats were intended to entice consumers to return to in-store shopping. Third quarter 2020 retail sales increased 12.9 percent overall and online revenue rose 3.9 percent, compared with the second quarter.¹¹

In terms of holiday marketing, many major retailers began offering Black Friday deals earlier in the shopping season. Retailers hoped to limit crowding in stores, provide consumers additional time to make their purchases, and increase overall sales by lengthening a potentially weak holiday shopping season.¹² The impact of these changes to marketing patterns was reflected in the PPI, as margins for televisions—a common Black Friday “doorbuster” sale item—declined in October 2020, the first October decrease since 2011. The 2021 and 2022 holiday shopping seasons showcased a similar trend, suggesting that retailers again started their sales earlier. (See table 2.)

Table 2. PPI directional changes for gross margins tracking retailing of televisions, for October though December 2009–22, not seasonally adjusted

Year	Televisions, October 1 month percent change	Televisions, November 1 month percent change	Televisions, December 1 month percent change
2009	5.0	-4.9	-7.4
2010	0.6	2.0	-12.8
2011	-2.3	0.0	-0.4
2012	11.2	-6.9	-6.2
2013	4.1	10.5	-32.9
2014	6.3	-5.0	-29.9
2015	11.6	5.9	-29.1
2016	6.3	-12.1	19.9
2017	8.3	-14.0	-4.9
2018	1.7	-22.1	14.7
2019	2.8	-14.9	3.4
2020	-16.4	-13.4	10.0
2021	-17.4	-12.1	1.5
2022	-4.5	-11.4	-5.9
Source: U.S. Bureau of Labor Statistics.

Effects of the pandemic, supply chain issues, and future online shopping growth

As the United States emerged from the pandemic, the retail industry and seasonal holiday shopping patterns had been altered. Supply chain issues continue to hamper several major industries, and rapidly changing consumer preferences have also led to boom-and-bust cycles. Data from the National Retail Federation (NRF) highlights some key trends in the holiday shopping experience. In 2022, the total number of Black Friday weekend shoppers increased for the first time since before the pandemic. (See chart 2.) This reversed 2 years of decline in Black Friday weekend shoppers in 2020 and 2021. Analysts attributed this turnaround, in part, to a longer holiday shopping season stimulated by early season advertising and discounting, as well as a rise in online shopping. By Thanksgiving Day of 2022, the holiday shopping season appeared to be well underway.

Total in-store shopper counts have increased as the COVID-19 public health emergency recedes. According to the NRF, the number of in-store shoppers across the Black Friday weekend grew 17 percent in 2022, compared with 2021, nearly returning to pre-pandemic levels. (See chart 3.). Even with the overall increase of in-store shoppers, malls remain measurably less crowded than before the pandemic. In 2022, indoor mall visits were down 11.7 percent from pre-pandemic levels and 3.9 percent lower than in 2021.¹³

Holiday spending patterns appear to be adjusting

In 2022, average spending per shopper over the Black Friday weekend continued to show weakness, compared with pre-pandemic levels. While average spending over the traditional shopping weekend increased to $325 per shopper in 2022, an 8 percent rise over 2021, spending was still 10 percent below the 2019 level of nearly $362 per shopper. This change in spending patterns is due, at least in part, to the shift in the holiday advertising season. Holiday-related advertising, which lures in shoppers earlier in November, likely undercuts sales over the Black Friday weekend. (See chart 4.)

Chart 5 reveals that online shopping outpaced in-store shopping over the 2022 Thanksgiving Day weekend. Only on Saturday, the day following Black Friday, commonly referred to as “Small Business Saturday,” resulted in more in-store shoppers. A total of 77 percent of shoppers surveyed on post-Thanksgiving Saturday stated that they were specifically shopping at small businesses.¹⁴ It’s logical to assume that in-store shopping would surpass online shopping on this day, as one survey found that 23 percent of small businesses did not have a website.¹⁵ The return of in-store shopping on Small Business Saturday is a reversal from 2021, when lingering concerns regarding the pandemic impacted some shoppers’ decision-making. Overall, in-store shopping volume rebounded strongly in 2022, compared with 2021, while online shopping increased modestly.

Conclusion

Black Friday weekend is generally considered the predominant retail shopping event of the year—both pre- and post-Covid and as online shopping expands. PPI data show prior to 2015, gross margins for televisions and computers, commonly advertised as Black Friday sale items, generally held in November, and that retailer discounting accelerated in December. Beginning in 2016 this trend reversed, as gross margins generally fell in November but rebounded in December. More recent PPI data suggest that retail margins for televisions, computers, apparel, and a variety of other high-profile holiday products now decline in November, and even October. These early-season discounts go hand-in-hand with the recent tendency for retailers to begin advertising for the holiday season earlier in the year. Retailers amplified this trend in 2021 and 2022 in response to changes in buyer preferences related to the COVID-19 pandemic and a substantial rise in on-line shopping. Data from the National Retail Federation and the U.S. Census Bureau reveal the dramatic increase in online shopping with the onset of the pandemic. Prior to the pandemic, online shopping was about 11 percent of total retail revenue, but by 2022 this percentage approached 15 percent. Moving forward, the Black Friday holiday shopping event likely will continue to evolve. What was once a “door-busting” phenomenon has been replaced with a two-month event with both online and in-store sales being advertised as early as October.

This Beyond the Numbers article was prepared by Ian Schaaf, former economist in the Office of Prices and Living Conditions, U.S. Bureau of Labor Statistics. For more information contact Michelle Chapman, supervisory economist for PPI trade sector indexes. Email: chapman.michelle@bls.gov; telephone: (816) 285-7172.

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