Special to SEGAZINE
Stores have thousands upon thousands of “discount” labels ready to be slapped on products when Black Friday sales begin. But just like the name “Black Friday” itself (since the sales will actually start Thursday in many cases), those labels aren’t exactly accurate.
The Wall Street Journal has a story on what it calls the “dirty secret” of Black Friday discounts, which really shouldn’t be a secret to anybody: Retailers work well ahead to set starting prices of goods so that, when the products are “marked down” by 50 percent, everybody still makes money.
Shoppers know this, rationally, but they don’t seem to care much. When former J.C. Penney CEO Ron Johnson tried to break that chain’s habit of continually marking up goods to later “discount” them, customers rebelled and he was shown the door.
But sometimes, the math goes off and retailers have to actually discount stuff below what they hoped to sell it at. That may be what happens this year, given the caution on margins from Best Buy Co. Inc. CFO Sharon McCollam, who said, “If our competition is in fact more promotional in the fourth quarter, we will be too.”