All those signs advertising 25%, 40%, even 50% off can be difficult to argue with, but the truth is that in most cases, what you’ll actually be hunting this Friday is not a good deal, but the thrill of a perceived good deal. Even though discounts have risen since 2009, stores’ profit margins have remained largely the same.
The reason?
“Big retailers work backward with their suppliers to set starting prices that, after all the markdowns, will yield the profit margins they want.”
To understand why this is, you first have to understand how markup works. When a supplier sells an item to a retailer, the retailer buys it at a wholesale price and then sets a retail price that nets them a profit that’s double, triple, or even more what they paid. By setting that retail price even higher than normal, stores can advertise and give deep discounts while still maintaining comfortable margins.
But what about doorbusters?
Generally speaking, the only real good deals you’ll find on a Black Friday are those “doorbusters” you see people lining up for days in advance. These are advertised to entice shoppers, and some larger stores will even take a loss on these items, assuming that shoppers will make other purchases once they’re in the store.
Even then, there are some drawbacks. Most retailers only stock a limited quantity of doorbuster items, meaning you may actually have to camp out to get one. Also, if you arrive too late to find your deal gone, be wary of sales people pushing a very similar, much more expensive item your way.
So is getting up at 4 am this Friday morning really worth it?
Probably not.
This year especially. Unless you’re after one of those big, deeply-discounted items meant to draw shoppers in, you probably won’t be saving much. And with many sales starting pre-Thanksgiving and continuing all the way into the holiday season both online and in-store, you’ll have plenty of opportunities to do your shopping on your terms.
source: totalmortgage.com
