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.
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.
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.
Usually the product being sold at 50% off are:
- things that would’ve been liquidated anyway
- things that aren’t actually 50% off. The base price was increased.
- crap to get you in the door because the retailer knows you’re going to spend more on other stuff during the holiday period
Back before Amazon (I’m sure it still exists I just haven’t been in retail), on Black Friday we had a loss leader that would bring people to the store. In our case it was a pallet of DVD players. We priced them at break even at our cost to get them to the store so we would lose money on the sale if you accounted for labor. The goal was to entice people into the store so they would buy our other crap.
I wouldn’t be surprised if “loss leaders” aren’t actually losing money these days with how our Corporations are doing.
When I worked at Radio Shack, they had cell phones as loss leaders to sell AA batteries and those multi-tip charging blocks. The way management acted, it seemed like those were the only profitable items in the store. For some reason, they went bankrupt.
Retail is still pretty cut throat. As someone that’s in retail for a big retailer, and is close to the sales data, I can attest to the fact that people are still wiling to break even or lose money on something if they think it will lead to a sale of something else. That’s really really common.
Most of these “sales” are bullshit and we are outright being lied to regarding pricing.
Should be illegal, but it’s not.
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.)
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.
