CHESTERFIELD, MO (KPLR) – The whole idea behind Black Friday shopping is bargains. But are those bargains real?
Retailers face a conundrum. Shoppers want discounts. Stores still have to make a profit. So how do you do both?
Much of shopping the holiday season - not just Black Friday – revolves around discounts and bargains. That’s especially true since the economic crash of 2008.
Shopper Mona Jackson explains, “I think I tend to look more for deals and coupons and things that’s gonna give me a discount to save a little money.”
Gayle Chazen, another shopper, adds, “Do you look more consciously for bargains and cut-rate prices than you used to? For sure. I always look for bargains. I always wait to see if I can get it on sale or something.”
It’s something all retailers are aware of.
T.J. Zuzga, with J.B. Robinson Jewelers, explains. “If it’s buy one, get another one half off, that’s not a big enough incentive. We have to get a big sign, big lights, pull as many people as we can.”
The great recession accelerated the trend.
According to savings.com, a web site tracking retail prices, the average retail discount advertised by the 30 largest retail chains was 25 percent in 2009. By 2012, that average discount had jumped to 36 percent.
The average gross profit margins of those 30 largest chain stores was 27.9 percent in 2009 and exactly the same in 2012.
But wait a minute. How can the discounts be going up, and the profit margins stay exactly the same? That’s because a lot of these chains are artificially inflating the retail list prices.
It’s not all chainsand it’s not all stores. But enough do it to give the shopper a feeling of having secured a deal when maybe they haven’t so much.
Shopper Judy Martin says, “I go right to the clearance rack most of the time.”
Shopper T.J. Jackson adds, “We’re kind of frugal. We don’t spend like crazy.” So you’re looking for deals? “Definitely.”
But in the new world of competitive retail, just because it says it’s a deal, doesn’t mean it really is.
So, you might ask what is that list retail price that an item’s marked down from? It’s quite often fiction so a retailer can offer a discount and still make a decent profit.