Before you can truly save money on Black Friday, you need to understand how Black Friday came to be and the retailer strategy behind it.
How Black Friday started:
Since the early 20th century, the day after Thanksgiving has been regarded as the beginning of the holiday shopping season. Since many people have the day off, retailers have seized the opportunity to create a shopping frenzy. The frenzy led the day to be dubbed “Black Friday” by Philadelphia police in the 1960s due to the heavy traffic.
The retailer strategy behind Black Friday:
Black Friday is associated with spectacular deals on coveted holiday gifts. Stores send out circulars a few days to a week in advance, highlighting door buster specials and early hours. The strategy has paid off, as Black Friday is well known as the busiest shopping day of the year.
With so many deals from most merchants, you might wonder if some of them might be too good to be true. In some cases, stores do create misleading advertising and questionable price cuts. This can be especially true when an item is in high demand and available from competitors. Merchants must then take care to ensure that they don’t lose customers’ trust and cause them to go elsewhere.
Still, there is usually a bit of a catch with some of the amazing deals you’ll find on Black Friday. Most stores advertise insanely low prices on one or more in-demand items, and these are known as loss leaders. The term refers to the fact that these items are often sold below cost in order to get customers in the door. In most cases, quantities are limited, so customers show up hours before the store opens in order to increase their chances of obtaining the item at the advertised price.
Once the advertised quantity is gone, a good sized crowd of shoppers has gathered inside the store. Some customers might leave in a huff, disappointed that they didn’t get what they came for, but most will stay and shop for other items. That is the whole point of loss leaders – to get customers in the store to buy items with higher profit margins.
Retailers often take this a step further by raising the prices on other hot items. They might keep them priced high or advertise an exaggerated regular price with a discount (which amounts to somewhere in the neighborhood of the true regular price). Customers facing long lines might take more time to browse the store once they are inside and instead of checking prices elsewhere, they may decide to go ahead and buy what they want while there.
How to Really Save Money on Black Friday
If you plan to go shopping on Black Friday, it pays to be prepared and use your own strategy. It’s best to go out with a list in hand of the items you want to buy. It’s even better to compare prices on that item from several sources a few weeks before the big day. By using this strategy, you’ll know if the price is inflated at any store.
If you are lucky enough to score a loss leader item, that’s great. If you don’t, keep in mind that other stores may also have great deals on (and higher quantities of) the same item. The store you visited originally also might receive more items at a later date and may even offer a better deal at that time.
There are many great deals to be found on Black Friday, but it’s important to do your own homework before you set out on your shopping spree. If you don’t, you could possible spend more than necessary. Now that you know the how Black Friday came to be and the retailer strategy behind it, you can come out ahead this shopping season!