It is estimated that consumers drive roughly 70% of the U.S. economy. For many retailers and related businesses, the shopping season that officially kicks off on Black Friday and runs through Christmas is the most important period of the year. Black Friday is said to signify the period in which sellers start earning a profit, or shifting from the red (which signifies a loss) to the black in terms of the bottom line. Below is an overview of business-types for which Black Friday can't come soon enough each year.
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The holiday rush usually means that demand outstrips supply and seriously strains the resources of many retailers and service providers as the year winds down. As a result, a plethora of temporary businesses sprout up to meet the surge in demand and earn a buck. Seeing as these businesses only operate for a short period of time during the holidays, the period determines if they will be profitable and survive to open again next year.
In terms of retailers, Christmas decoration locations magically spring up at local malls, as do calendar stores and kiosks. For these operators, total sales and profits are made in an extremely tight operating window, with a condensed schedule to open a store, hire temporary workers, stock the shelves and best ensure inventory is sold off prior to the New Year's discount period. (For related reading, see What is Black Friday?)
The need for non-profit donations may be constant throughout the year, but individuals tend to be more in a giving mood as the holiday season approaches. One key reason is that these individuals become more focused on helping others, be it gift giving to families or food and gift drives for needy families. Another is simply economics as donations are tax deductible and must be completed by Dec. 31 to qualify for that calendar year.
Logically, non-profits can receive a large chunk of their operating funds from donations made toward the end of the year. In response, one industry consultant suggested they move their fiscal year end periods to September, so as to be able to work through any surprise shortfall in donations in any given year.
Last year, an estimated 50% of toy sales took place during the last three months of the year. By the numbers, that meant the toy industry made more than $10 billion during the final quarter, out of nearly $22 billion in total annual sales. As such, the rush toward the holiday season can mean the difference between a profitable year and one that ends up significantly in the red.
There are actually four important periods for candy makers throughout the year. These include Valentine's Day, Easter, Halloween and Christmas. As such, Black Friday and the surrounding shopping months don't necessarily make or break the year for most diversified confectionery producers, but there are certain product categories where the end of the year accounts for the bulk of sales and resulting profits. This includes varying fudges, candy canes, peppermint bark and nearly any boxed chocolate that you can think of.
Last year, an estimated 80% of companies threw some sort of holiday party for their employees. With alcohol served at many of these occasions, demand starts to heat up toward the end of the year. One retailer experienced a spike in wine sales during the fourth quarter, with demand accelerating from Black Friday up until just before Christmas.
The Bottom Line
A well-run business will take the entire year to plan for Black Friday and the all-important fourth quarter shopping season. With minimal hang-ups, it can ensure the business survives the year and is around for many future holiday periods. (For related reading, see Why Americans Need Boxing Day.)