Although it may seem early many retail stores across the country are beginning preparations for black friday. On november 24, 2017 the “Christmas-shopping season” begins. Black Friday is now a nationwide “deal day” where retail stores drop their prices with “door-buster” deals. If you are like me you may be wondering how retail stores are able to give such good deals, and there are three major reasons that companies are able to afford these massive discounts. The first reason is the large increase in foot traffic. The world of retail is getting better and better at marketing sales for “black friday”. One example of their growing education of the market is through the use of discounts to increase marketplace force. By lowering prices smaller retail stores are able to bring in a larger market bases, and for a company that has a strong walk-in/sales ratio the increase in profits can be monumental helping boost stores to their highest potential. Another way retailers are able to afford their discount prices is by limiting discounts. A common sales tactic used by retailers is lowering the prices of complementary goods. For example on “Black Friday” big name retail stores will lower the prices of more expensive products such as video game consoles, however the stores will not alter the prices of accessories and games for the systems. As a result any profits lost through the discounted systems are made up through the newly increased sales of regularly priced complementary goods. The third and final reason stores can afford “low prices” is “baiting”, more often than not companies will advertise a first come first served sales tactic, this creates a sense of urgency causing customers to splurge on one sales trip rather than waiting to purchase their desired products. Through the use of this tactic there is both an increase in immediate sales and a long term increase in sales as more often than not the items will remain on discount long after black friday has passed. This helps clear out store space to bring in new goods for the retail stores next “big deal day”.
Goel, Nalin MBA. “How do online retailers make money despite giving huge discounts?” Quora, May 17, 2015