This past weekend nearly 150 million Americans braved Black Friday — literally a deadly holiday — spending at least $57 billion dollars in pursuit of the sale. And yet evidence suggests that the idea of a sale price is largely artificial. So why do we have such a Pavlovian response whenever the word "doorbuster" is used?
Last week the Wall Street Journal published a story on the "Dirty Secret of Black Friday 'Discounts'," pointing out that although the number of deals offered by 31 major retailers increased by 63% between 2009 and 2012, their profit margins all stayed roughly the same.
The reason that holding so many sales hasn't bankrupted all these companies is because, as the Journal puts it, they're illusions. Retailers' margins have stayed the same because the average list price — the price the item is eventually discounted from — has skyrocketed.
It's almost all mental. Retailers are required to sell their products at the list price, but according to the Journal, those prices are quickly discounted. And very few people ever actually pay that list price — former JC Penney CEO Ron Johnson said in 2012 that the department store sold less than one in 500 items at full price.
The Journal provides a great example with a television listed on Amazon.
Amazon.com is featuring a Samsung 60-inch HDTV in its 2013 Holiday Gift Guide. The TV is selling at a 45% discount to its list price of $1,799.99. But, according to Decide.com, a price-tracking firm owned by eBay Inc., the TV hasn't sold for anywhere near the list price in months. The most it has sold for in the past eight months is $1,297.85, according to Decide.com. As recently as October, it was priced at $997.99, about the same as its current sale price.
Over at the Atlantic, Alexis Madrigal writes about a Black Friday deal at Macy's for a $334 blender discounted to $200.99. Madrigal searched for the blender with other retailers and found it selling for below $200. Then he found Macy's pricing policy.
"'Regular' and 'Original' prices are offering prices that may not have resulted in actual sales, and some 'Original' prices may not have been in effect during the past 180 days."
But it's an illusion we don't want to let get of. Retailers have no choice. We won't let them. When Macy's tried to cut down on coupons in 2007, customers stopped shopping there.
Johnson was the CEO of JC Penney when he decided to just list items at the prices they were actually selling for. That's how he became the former CEO. Shoppers wanted no part of it.
So why aren't we looking at the prices instead of the fake discounted percentages? Why do we need so badly to be lied to? And why are we participating in this, forcing low income employees to give up Thanksgiving dinners and risk their lives for minimum wage for pretty much nothing?
[image via Getty]