After a nice Thanksgiving dinner and some time with friends and family, everyone comes together for a while longer in the spirit of shopping and savings. We all know that Black Friday is one of the biggest shopping days in the U.S., some even consider it an un-official holiday.
But the real question that many consumers ask themselves is “Do businesses really make a profit off of these sales?” It is also believed that businesses use this day to “catch up” on any loss of profit throughout the rest of the year, but they couldn’t be more wrong. While Black Friday is a day that businesses look forward to, it’s definitely not to “catch up” with any losses.
From the consumer’s point of view, we see something at 50% or 70% off and we can’t help but take a second glance to see what it is. And most of the time, we will end up buying products that we don’t even need, but with a 70% off, how can we resist? It turns out that the 50% off those pair of shoes you’ve been dying to buy was actually planned right down to the cents. And that the 70% off that LED TV only means you’re paying for the television what it is actually worth. Why? How? Well, it turns out businesses have a few tricks up their sleeves.
Black Friday Secret 1: Originally priced merchandise is actually overpriced. The discounted prices on Black Friday have already been calculated into the product price, leaving businesses with a stable profit margin.
Remember all those times you saw a shirt you absolutely loved, but when you saw the price you didn’t love it so much anymore? All those times you thought “This costs way too much.” Well, you were right! Businesses tend to over-price many of their products, not just to have a larger profit margin, but to make discounts more appealing later on. The goal of a discount is to save the consumer some money, but not at the expense of the businesses profit. So next time you see something discounted at 25%, 50%, or even 75%, don’t waste a second thought on thinking whether business are making a profit off of it, because they definitely are.
Black Friday Secret 2: Many retailers actually raise their original products price before the holiday discounts kick in.
Over the years this has become increasingly harder to do because of the rise of e-commerce. Since prices are constantly being shown on a stores website, consumers are able to stay up to date on prices on a day-to-day basis, making it harder for stores to raise the original price of a product. But just a few years back this was a national trend. Weeks or even days before holiday sales stores would actually raise their product prices, then offering customers a sale, that would just leave the product at the same price it started off with. But even though this has become harder to do, it is not impossible, so always keep an eye out.
Black Friday Secret 3: Phantom Discounts.
Phantom discounts occur when a retailer sells a product with a large discount to attract consumers, yet a few months down the road, the same product is seen regularly priced at the alleged “discounted” price from a few months earlier. Consumers were tricked into believing they were getting a deal on their product, when they were really just buying it at the original planned price. If a retailer is caught doing this by a consumer they can actually be sued, because according to the Federal Trade Commission, retailers are supposed to keep products at a regular price for a “reasonably substantial period of time” before marking them down.
Next time you go into a store and run to the big red “FOR SALE” sign, remember that businesses know what they are doing. Have you ever seen a white sale sign? Of course not! They will mostly be red, with some exceptions of yellow. Why? Because nobody gets excited when they see the color white. The colors red and yellow are known to grab peoples’ attention; they bring up your adrenaline and get you excited. Aren’t you tired of being forced to see Black Friday commercials on every channel 24/7? Who wouldn’t be? Yet, don’t you have store opening times memorized? Of course you do, whether you meant to or not. The repetition of these commercials is strategized down to the second. They’re meant for you to wake up at 4 a.m. on Friday morning and get to Best Buy before those doors open for an unmissable sale.
And let’s not forget that Black Friday sales are run off of marketing. From the color in commercials, to how many times it’s played, to the music playing in the background, and the “50% OFF ALL ITEMS” flashing in bright red on your screen. If it weren’t for these atmospheric details that marketers perfect, there wouldn’t be as much profit and sales as there are. They have even estimated that there will be around $59.1 billion dollars in sales this weekend alone. So, tell me again how businesses are losing profit?