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.
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.
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.
Most of these “sales” are bullshit and we are outright being lied to regarding pricing.
Should be illegal, but it’s not.
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
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.
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?
Don’t forget “Giving Tuesday” - designed to manipulate you if have any money left after all the rest and feel guilty about that fact.
I think you are a minority
Yes. Either my patience for all the sales has fully evaporated or the sales themselves are becoming truly insufferable (or both), because at this point I do as little shopping Thanksgiving week as possible. And this year I used “Black Friday” sales emails as a reminder to unsubscribe from things.
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.
Fyi most stores mark up about 500% from what it cost to land.
