A Grey Area: Black Friday’s Pricing Truths

Shoppers at Best Buy on Thanksgiving

Hundreds of shoppers in line at a Florida Best Buy on Thanksgiving Day/photo Thursday Review

A Grey Area:

Black Friday’s Pricing Truths

| published November 28, 2015 |

By Keith H. Roberts, Thursday Review contributor


It’s no secret that Black Friday has crept its way into everything—from clothing stores to appliances, from books and music, to car sales and even home sales—even as the concept of a day-after-Thanksgiving event has migrated slowly forward on the calendar, creeping into Thanksgiving itself, and, in some cases, the day before Thanksgiving.

It’s all about cash—your cash. Stores want it, and they want to claim it first—before you spend it all or blow your holiday budget. Between Black Friday and Cyber Monday, retailers (both the online operators as well as the brick-and-mortar stores) want to soak up as much of your disposable money as possible, and the competition for every dollar is intense. Example: Macy’s announced early last week it would open its doors on Thanksgiving Day at 6 p.m. instead of last year’s 8 p.m. Sears, Kohls, Toys R Us, and a few others have followed suit. Some Best Buy locations opened even earlier, at 5 p.m. Kmart may have topped the list; it says most of its locations opened at dawn on Thanksgiving Day, and then remained open non-stop for some 40 to 48 hours—a marathon of shopping and saving, coupled with a no-exception policy for its employees, who must participate in the frenzied Thanksgiving scheduling.

But several major retailers are expecting problems—even with the earlier hours and the all-night savings—and some have seen some lower-than-expected traffic. It’s complicated.

Target, which is still recovering from a disastrous 2013 cyber-breach which exposed the personal information of tens of millions of customers, as well as a unfortunate experience with stores in Canada, expects to have a bad holiday quarter, and its management has warned Wall Street of the coming crunch. JC Penney, long troubled and still trying to undo a massive mess caused what its previous CEO sought to revamp the retailer’s image and brand identity isn’t faring much better this year. Analysts expect the iconic chain to fall below what is normally expected to be a good quarter for any major retailer.

Even Wal-Mart, the behemoth partly responsible for the troubles now facing Kmart, Sears, and JC Penney, announced earlier this fall that it expects to have its worst holiday quarter since the worst days of the Great Recession, from 2008 to 2009. In October Wal-Mart lowered expectations across the board, saying its recently-announced plan to give most of its employees a wage increase will also greatly impact its bottom line. But cutting even more deeply into Wal-Mart’s profits is the reality that fewer shoppers fill its stores at the holidays.

The reason the big retailers are expecting to ground during the holidays—normally the biggest time of the year? Simple. Amazon. Well, not just Amazon, but a host of scores of online retailers who will soak up an expected 30% increase in web-based sales this year alone. And Black Friday is no exception.

Sure, you may have still seen huge lines outside a lot of stores this year—queues of folks who believe they will save big if only they can be the first or second or third ones in the doors. Some of those lines started the day before Thanksgiving, especially at those stores which promised to open early Thanksgiving Day, such as Best Buy. But those lines are getting shorter this year, not longer, as millions decide to order more cheaply and more conveniently using their computer, laptop, iPad or smartphone.

But there’s more to the story than what we already know and understand about Amazon’s new dominance in the marketplace. There is also the issue of pricing.

As NBC News and dozens of other media outlets have reported, independent analysis of pricing shows that many items are just as costly on Black Friday as one week before Black Friday, and in some cases the price even goes up. Retailers have caught on to the fact that millions of shoppers take for granted that the bargains being advertised are, in fact, genuine—when in actuality the price may be the same or even tweaked up a notch, depending on the store. Conversely, many savvy consumers have caught on to the scam and now do their biggest shopping at other times of the year—well before Thanksgiving, even well before Labor Day, or better still, closer to Christmas as retailers realize how much merchandise will be left behind and when the sale prices really kick-in.

Another problem the age-old trick of the “lost leader” (as opposed to a "loss" leader) an item which is genuinely marked at an unbelievably low price, but for which the store may only have in limited supply. The gimmick is time-honored and simple: you come in the for TV priced at $99, but discover that there were only 12 in stock and now they are all gone. No problem…just shop around for another TV at another modestly-good price, and buy it instead. In the end, the retailer calculates that you will spend more than what you had planned—often 50% to twice as much—on some other “sale-priced” item.

Consumer experts suggest using the internet to your advantage to avoid overspending. Even if you do not intend to buy online, it is relatively easy to compare prices—apples to apples, oranges to oranges—with a thorough check of store prices. Such a check of prices may also yield greater savings by simply ordering online, and certainly add to the convenience factor, reducing wasted time in stores and wasted gas getting to the mall or shopping center.

This holiday season, Americans have spent some $1.7 billon (yes, that’s billion) in online purchasing so far, according to numbers provided by Google, Adobe and Amazon. That number could easily double between now and New Year’s Day.

In the meantime, some stores have decided to push back against the longer hours and the madness of thousands of customers jamming stores and creating interminable lines. In now famous business moves, several retailers decided to not open at all on Thursday, close early on Thanksgiving Eve, not participate in Black Friday, or some combination of all three.

Lowe’s and Home Depot, each of whom once flirted with Thanksgiving Day hours and open-at-midnight door-busting, announced this year that they would each remain closed all day and all night on Thanksgiving. Warehouse discounters Sam’s Club, Costco and BJ’s also chose to remain shuttered this year, and did not reopen until “normal” business hours on Friday. Dillard’s, which also tinkered with all kinds of variations on the crazy hours in 2013 and 2014, this year chose to simply remain closed…period. Likewise, Marshall’s and Burlington Coat Factory—two other stores which have faced serious financial challenges in the last three years—opted to close all day on Thanksgiving. Nordstrom and Menards also took the step to flatly remain closed, despite pressure from some quarters to open. Each company issued statements and bought ads in newspapers declaring that they want to honor their employees’ rights to celebrate the holiday with family and friends.

TJX, the parent company of T.J. Maxx and Marshall’s, issued this statement. “We consider ourselves an associate-friendly company, and, we are pleased to give our associates the time to enjoy the Thanksgiving holiday with family and friends.”

And despite rumors that the company was on the brink of choosing to open part of the day on Thanksgiving, grocery giant Publix kept its 1,100 locations closed all day. Analysts say Publix may have lost foot-traffic to Wal-Mart, which maintains a massive grocery footprint in most locations, but the Lakeland, Florida-based company in the end must have decided that its 178,500 employees should have the option to spend quality time with family.

Related Thursday Review articles:

A 1936 Book Explains Why Wal-Mart Will Have a Bad Year; R. Alan Clanton; Thursday Review; October 28, 2015.

Wal-Mart's Tough Times; Thursday Review staff; Thursday Review; October 8, 2015.