Black Friday and the Recession: Why IT Solution Providers Care

After the turkey has been consumed and the football games have been played, retailers open their doors for the biggest day of their year – Black Friday. And e-tailers get ready for their biggest day, Cyber Monday.
Why should IT solution providers care? Because consumer spending is two-thirds of the economy and it influences other types of spending, including IT spending.

Yet just two days before Black Friday the U.S. Commerce Department reported that in October consumer spending dropped at the steepest rate in more than seven years, down 1 percent. The drop is the biggest since right after the terrorist attacks on Sept. 11, 2001. The Commerce Department report comes on the heels of a series of negative economic events and reports that have some pundits talking as if we are on the verge of another Great Depression.

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So this year, consumer spending on Black Friday and Cyber Monday will be even more closely scrutinized than it has been in years past as everybody from economists and analysts to the biggest technology companies look for clues as to where the economy is headed.

And those observers include IT solution providers and others in the IT technology channel.

"What will be key is what happens on Black Friday and Cyber Monday," says Ken Lamneck, Tech Data president of the Americas. Lamneck believes that everyone has been reigning in spending, but that consumer spending on these key dates will be indicators of what will happen in the months ahead.

"There’s no question that Monday, Dec. 1 is going to be an interesting day," says Doug Ford, president of The I.T. Pros, an MSP in San Diego. Regardless of the outcome, however, Ford says he has a plan to take advantage of the downturn.

"We have identified two specific technology verticals as being more recession resistant – storage and virtualization," Ford says. "Storage never stops growing. Our customers need it and they need more of it. Virtualization is just a good story – particularly in a down economy when IT departments are being asked to do more with less."

Whatever happens on Black Friday and Cyber Monday, the results will resolve some of the uncertainty that has hung over the industry since the Wall Street crash began in October.

"Resellers are experiencing a lack of visibility," says Andy Bryant, president of Arrow ECS. "There may be some squeeze coming, but it is one of those things where we really can't see out past December."