Black Friday is (somewhat) a scam, says Wall Street Journal

Black Friday is the name of the Friday following Thanksgiving in the United States where most retailers offer huge discounts on their products. In fact, Black Friday is so huge in the United States that many stores are in the red (aka losing money) all year long until this day. Did the rock-bottom priced products and extensive discounts entice you to get out of bed and go shopping early Friday morning (or late Thursday night) this Black Friday? If so, you will probably feel like shit when I tell you Black Friday is (somewhat) a scam.

Well, it isn’t me per se saying it but rather the Wall Street Journal. According to analysis by Decide Inc. (a “price researching firm”) and The Well Street Journal, many of the “doorbuster” bargains offered by stores on or for Black Friday are available at lower prices at other times of the year. Say what?!

Decide looked at 500 doorbuster deals from big-name retailers in the United States and found at least one third of these “Black Friday deals” were in fact nothing more than scams — the same products were available for a lower price earlier in the year… often at the same store running the doorbuster. For example:

  • Sears advertised KitchenAid Artisan Series Stand Mixer for $319.99 on Black Friday. According to Decide, Sears sold the same product for $296 in March.
  • Home Depot advertised GE Adora dishwasher for $598. According to Decide, Home Depot sold the same dishwasher for $538 in October.

That said, however, Decide is keen to mention that retailers do not explicitly promise the lowest prices of the year on Black Friday and not all deals on Black Friday are scams. Indeed, Decide says “majority” of the dealbuster sales it checked were indeed “genuine”.

In the age of technology you may ask why people get duped by the non-genuine Black Friday sales. Well, firstly, just because a product was available at a lower price at a different time of the year does not mean that the sale on Black Friday is not a deal — it just isn’t as good of a deal. So maybe “scam” is a bit of a strong word. More important, however, as Rob Docters of McKinsey & Co. points out, “people associate Black Friday with good prices, and that eliminates the need to check price”. Without price checking, we simply drink retailer kool-aid.

Speaking from personal experience, I’ve come to learn Black Friday is not as great as people make it out to be. Indeed, many products can be had for the same, or better, discounts throughout the year if you shop online. In my experience, every year Black Friday offers maybe one real deal that cannot be had other times of the year. The rest, in my opinion, is marketing.

[via Wall Street Journal]

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  1. cpusrvc

    @Kerry: It’s apparent that you haven’t been in a business that sells product. Sales increase IMMENSELY at this time of year because of the upcoming holiday season of giving gifts.

    As an example, during the slower times of the year, a item might sell 100 units in a month for $20 each and costs $10, with a profit of $10 each. That’s $1,000 profit. During this time of year, the market is so much larger that if they lower the price to $15, produce a profit of $5, and sell 500 units. That’s $2,500 profit.

    Add to that, the manufacturers also are competing for sales, and they lower their prices too. If they lower their price to the retailer on that item from $10 to $7, that’s 3 more dollars the retailer can lower the selling price, to $12, and still make the same profit. That’s why at this time of year so many items have substantial discounts.

    There are other factors also, but this is why they cannot sell at such good prices at other times of the year.

  2. Mike

    Black Friday indeed can be a great deal for certain items–you just need to know the pricing. For example, I just purchased 16 pounds (!!!) of Ghirardelli dark chocolate morsels for cooking (and snacking) in a Black Friday sale, saving over a third the cost off supermarket sales pricing.

    As to the name “Black Friday”: many businesses are “losing money” (as stated in the article) until some point in the year, given on-going costs, payment patterns, spending patterns, and the like; it’s just that by around this time of the year, business have started “making money,” having paid off certain costs and increased their sales. It’s not something negative about the businesses, just the way the business world operates, especially in the retail/commercial sales field, given the flow of holidays and the like.

  3. Kerry

    Its no wonder they are losing money all year. If they can afford to offer it for less then that says alot about the greedy profit margin they have. Why not be happy with a little profit all year long rather then one big one once or twice a year, pure greed. Thanks Ash for confirmiing my beliefs on this, and no I did not shop on Black Friday.