Monday, December 02, 2013

Why Are We So Obsessed With Sales?:

Last week the Wall Street Journal published a story on the "Dirty Secret of Black Friday 'Discounts'," pointing out that although the number of deals offered by 31 major retailers increased by 63% between 2009 and 2012, their profit margins all stayed roughly the same.

The reason that holding so many sales hasn't bankrupted all these companies is because, as the Journal puts it, they're illusions. Retailers' margins have stayed the same because the average list price — the price the item is eventually discounted from — has skyrocketed.

It's almost all mental. Retailers are required to sell their products at the list price, but according to the Journal, those prices are quickly discounted. And very few people ever actually pay that list price — former JC Penney CEO Ron Johnson said in 2012 that the department store sold less than one in 500 items at full price.