Infuriating to think that all these places can sell products with a 50% discount and still make money. The rest of the time how much are they raking in? But we are all scraping by and gotta do what we gotta do. Thanks for letting me vent.
It gets more mildly infuriating when you notice that they’ll typically jack up the prices just before a “Sale” to make it seem like a better deal.
I worked for Walmart many many years ago, and this pissed me off to no end. On Thursday I would have to go through and increase the prices on everything that was going to be on sale the following week. Then Saturday morning I had to change all the prices back to what they were (or just a sliver lower). Then I would get bitched at for putting the wrong sign in place (these were supposed to get the “Rollback” signs, not the “Sale” signs, ffs).
Hated that job.
See the Anchoring Effect.
Don’t forget that after the sale it will remain at the jacked up price.
NY State resident here. IIRC, Kaufmann’s got in big trouble with the Attorney General years ago for “sale prices” that allegedly represented discounts from the “usual price”. The usual price was fictitious - the products had never sold for that. I believe it led to a consumer protection law that regulated truth in advertising for sale pricing.
Usually the product being sold at 50% off are:
- things that would’ve been liquidated anyway
- things that aren’t actually 50% off. The base price was increased.
- crap to get you in the door because the retailer knows you’re going to spend more on other stuff during the holiday period
Back before Amazon (I’m sure it still exists I just haven’t been in retail), on Black Friday we had a loss leader that would bring people to the store. In our case it was a pallet of DVD players. We priced them at break even at our cost to get them to the store so we would lose money on the sale if you accounted for labor. The goal was to entice people into the store so they would buy our other crap.
I wouldn’t be surprised if “loss leaders” aren’t actually losing money these days with how our Corporations are doing.
When I worked at Radio Shack, they had cell phones as loss leaders to sell AA batteries and those multi-tip charging blocks. The way management acted, it seemed like those were the only profitable items in the store. For some reason, they went bankrupt.
Okay, but let me know if you see a RadioShack.
There’s one near me, but in name only. It’s like a budget Sharper Image now.
Retail is still pretty cut throat. As someone that’s in retail for a big retailer, and is close to the sales data, I can attest to the fact that people are still wiling to break even or lose money on something if they think it will lead to a sale of something else. That’s really really common.
I worked in retail grocery, but I would imagine the situation is the same in other retail outlets. Everybody who has replied so far has a piece of the answer. Sometimes the sale item is a “loss leader,” sold below cost to bring customers to the store, where they’ll buy other products at the same time. Sometimes the price is jacked up before putting it on sale to hide a price increase, or take advantage of the anchoring effect. Sometimes stores take a loss on a product that isn’t selling well, and they just want to get rid of it to free up space. And sometimes the store’s buyers got a really good deal on purchasing inventory, for many possible reasons, like a bulk purchase, supplier clearing the warehouse, or pre-booking the order well in advance. (Manufacturers often give discounts for guaranteed purchases.)
But, yes, as you suspect, sometimes the markup is outrageously high, and they can still make a profit when offering 50% off. (Not often in grocery, which is a low-margin business.)
I’ll just add that BBY and Michael’s business mode is to use the Anchoring effect year round, so they can constantly offer 40-60% “discounts”. If you paid full price for anything at those stores (BBY is out of business, but still) you got ripped off.
Most of these “sales” are bullshit and we are outright being lied to regarding pricing.
Should be illegal, but it’s not.
My friend worked at Best Buy corporate some ten years ago. He got the corporate discount at stores so we went to check it out. Most of the big name stuff had almost nothing. So their margins were pretty thin there (not to say those companies couldn’t sell their products for less just that BB wasn’t getting most of your cash).
But for their in-house stuff like anything Insignia, the cost of a $20 HDMI cable went to $4. And that was a discount so BB was still making something.
I’ve started to become super jaded about discounts, especially at grocery stores because now I’m not looking at it like “wow I’m saving on eggs” but rather “so you’re probably overstocked and want me to bail you out or you’ll lose a shit on of profits if these go bad”.
I once worked in retail electronics. TVs and PCs ran at 5% margin, while cables and connectors ran at 90%. Some $20 cables were worth $1.
I’m happy to bail out grocers on their overstock products that I usually buy anyway. But anywhere else I just don’t believe in sales.
JCPenney got rid of sales years ago and went with a year round price based on the discounted price. The CEO who had the idea was later fired because the company was losing a lot of money and sales were down compared to other retailers.
The constant sales are done because the retail strategy works.
Cute, you actually think anything was actually 50% off…
They’re offering discounts on stuff they could unload. They have to get them out of the back room to make room for new stock.
Untrue. Most electronics are special made for black Friday and are worse products marketed as just the same.
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Probably most high end products. My TV has like an extra q at the end of the product number to denote that its a blackfriday model. No idea what else is different, but it’s a half inch smaller than the regular model, even though they are both advertised as 60"
With TV’s screen size being diagonal that loss so so tiny. Sounds like they were binned TV’s due to manufacturing process screw ups and they just made them black Friday models. Kind of recycling them so all ends well I guess…
Where are these magical 50% off sales? I haven’t seen any discounts on stuff worth buying this year (or last).
My tinfoil hat theory is stores don’t have the staff to run the classic large Black Friday exclusive sales so they’ve done weeklong deals.
Reality is covid changed the way they did it, that and many stores closing on Thanksgiving. Then they realized they could still make a similar amount of money with less risk to people and property. And with digital retail becoming more popular they’ll lose less product to theft and damages if you ship from a warehouse or have a personal shopper get it for you and bring it to your car instead of going into an overcrowded store.
Employees are less stressed, everyone is safer, and sales numbers are the same or better.
Craft stuff does legitimately go on sale. Fabric always gets deep discounts, and sewing/craft machines and tools also get a decent discount. It’s a great time to pick up stuff for a hobby you’ve kind of been interested in but weren’t sure you wanted to drop the money on it.
I just hate how commercialized the holidays have become.
Isn’t weird that we only have one day to celebrate Thanksgiving, but we have fucking Black Friday, Small Business Saturday, and Cyber Monday right after Thanksgiving?
Those are all based on the commercialization of Christmas, of course.
Don’t forget “Giving Tuesday” - designed to manipulate you if have any money left after all the rest and feel guilty about that fact.
It’s even more mildly infuriating for us across the pond… we don’t have Thanksgiving but we now get the Black Friday/ Cyber Monday nonsense. Grrr!
Many/most of the sales are not at a significantly lower cost than most of the time. Prices go up for a month or two before Christmas. For the sales, you might get a good discount on a single item in a store, which is when they expect you to buy other things too to make up for the single sale. Other times many things will be at slight discount, but they might at operating cost or much lower profit margin. You are expected to buy things which are not on sale when the sale is real, otherwise the price was raised for a while and only lowered for the sale. I have also heard that some things are made with lower quality for sales, so you may not be getting the normal quality.
I have never understood how these pathetic replacements of cultural holidays with sales days at a basic level are even slightly believable from the consumer side. The whole point of 99% of sales is to get people in the mood to buy things they otherwise wouldn’t be thinking about buying at that time…. but people are already the most in the mood to buy shit on black friday or cyber monday they will be all year… which makes it the absolute least sensible time to actually offer genuine discounts on items. It would be like a restaurant putting happy hour later into the evening when the restaurant is going to be packed anyways.
The whole “clearing out old stock” or “getting into the black” explanations don’t really make any sense either in a modern, internet based world where companies always have access to a willing market for used or older goods if they set the right price.
Imagine how we feel, when you don’t live in the US and you still got hit by the black friday…
Yes and it goes on for a week. And here it’s become the biggest sales period all year…
It depends, sometimes sales are at a loss for the company to simply clear out stock that they were not selling quickly enough.
So technically a direct loss, but definitely not a direct loss after tax breaks, and accounting for warehouse space freeing up in many cases. The warehouse space is worth more than the product past a certain age in most businesses.
Yup, stagnant inventory is a huge drain on resources.
Keep in mind a lot of these products are likely priced to be on-sale, and are scarcely purchased at full price.
This is especially true in stuff like Laptops, which are rarely purchased at full price anyway.
So many businesses put a large laptop purchase out to bid with expectations of a certain discount % written into the bid language, which I’ve always thought was so stupid. The manufacturer sets the list price at whatever they want so you can get your sweet 70% off while they still make exactly the same amount of money
