Black Friday, Cyber Monday Not Just for Consumers

Retailers – particularly purveyors of computers and electronics – are cheering after the brisk return of consumers to the malls this past holiday weekend. Early reports indicate Americans are opening their wallets to cash in on reported bargains on everything from name-brand clothes to flat-screen digital televisions. This is good news for retailers and online outlets, but it also may signal a boost to the overall economy – and it couldn’t come soon enough.

Black Friday, the traditional start of the holiday shopping season, is named so because it’s typically the point where retailers turn a profit for the year. Market analysts speculate that consumer spending in brick-and-mortar retail stores will increase two to three percent this year.

Online shopping is expected to jump as much as 35 percent as consumers search for Internet-only bargains, do comparison shopping and, frankly, just avoid the hassle of heading to the crowded malls. Even before today’s the anticipated bandwidth crush known as “Cyber Monday,” online shoppers were estimated to have spent more than $110 million since Thanksgiving on goods ranging from dishwashers to PCs.

But if you think this bonanza is only for retailers and online outlets, think again. Some analysts say the robust kick-off to the 2010 holiday season is a reflection of pent-up demand for goods, particularly electronics, and the desire to grab some of the latest gadgets. If consumers start spending, it will put money back into the economy and start a cascading effect on enterprise and business spending. Don’t think of this as “trickledown economics” but rather “ripple economics” in which dollars flowing equals activity across a wide range of sectors and industries.

This ripple effect is of particular importance to the channel, a segment of the technology industry dominated by small and mid-sized businesses. According to the Bureau of Economic Analysis, corporate profits have jumped more than 20 percent during the last two years, returning to pre-recession levels. At the same time, the revenue of small businesses – unincorporated partnerships and sole proprietors – has declined more than 5 percent during the same period. Enterprises, it seems, have more weapons for redistributing costs and absorbing economic retrenchment than their smaller counterparts.

Smaller solution providers may not have to wait for the ripple effect of holiday spending to find its way into the general economy. Between Black Friday and Cyber Monday was Support Small Business Saturday, an effort to get people to patron their local, small shops instead of patronizing the larger big box shops. Again, this effort is still very consumer oriented, but worth noting for smaller solution providers since many operate storefront retail operations, too. Some reports indicate Small Business Saturday did spark interest in local retailers.

More directly, ‘though, businesses are experiencing the same pent-up need as consumers. Businesses of all sizes have sat on aging equipment, applications and short-shrift services to conserve cash and minimize outflows. Many businesses simply cannot afford to forego investments in new technologies and IT infrastructure. The end of the year provides a perfect excuse to buy, since much of their purchases are deductable as business expenses. But, more so, the end of the year is when businesses no longer have to worry about preserving budget for expenses – they’re free to empty remaining allocations on the things they need.

Of course, solution providers are likely to get some service and support business out of all this consumer spending. These electronic devices – iPads, tablets, smartphones and such – will be brought into the workplace, and employees will want them integrated with their work systems. That spells opportunity for solution providers.

With a little luck and some incentives, Black Friday and Cyber Monday may be the beginning of a late year recovery for solution providers and lead to a robust 2011.