Saturday, November 28, 2009

Black Friday Backfire

While the official sales numbers aren't in yet, early reports from store managers seem to indicate that shoppers have now become smarter than the stores. Black Friday got it's name from the date that retail businesses crossed over into "the black" for the year, meaning they finally made money. Holiday sales are extremely important to retail stores, so much so, that the final outcome can make or break their annual sales goals. The basic premise is to get shoppers to come into their stores by offering extremely competitive prices on a few select items, often at razor thin margins, to entice buyers to choose their store over the competition. For the plan to work, however, shoppers must also purchase other goods and items at regular or more profitable prices. This is what the industry calls a "lost leader". What's happening now, is that shoppers have become more knowledgeable about pricing from other stores because of the internet and iPhone apps that make comparison shopping easier. Now consumers can go to each store, buy the "door buster" deal and move on, thus leaving the retail store without the extra profit from their other goods and services. Advertising executives and retail executives might have to re-think the "Black Friday" strategy in the future, or else see their profits dwindle even further into "the red"!

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