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Black Friday Goes Red

Paula Rosenblum, VP of content and research, Retail Systems Alert Group

The final bell has rung for the 2006 holiday season (except for gift cards—the gift that keeps on giving, but more on that some other day) and it’s time to take a look back and review results. while I specialize in focusing on how retailers used technology, this holiday season forced me analyze retailer psychology. With all the science available to support retailing, it’s surprising how many decisions seem knee-jerk and fear-based.

As a consumer, I take advantage of those fear-based, knee-jerk decisions. As a retail observer, however, I shake my head and ask, “Where’d the science go?”

For example, on Black Friday I ordered a 42-in. HD plasma TV. Like any good consumer, I spent half of Thanksgiving researching the TV, all ready to buy on Black Friday.

When it came time to make my purchase, the item, which was on sale for $1,099, was also on back order for two weeks. However, it was such a good deal that I didn’t mind waiting. (In fact, “my” store alone had 44 units on back order.)

Upon checking the price at presstime, my TV was advertised at $1,709.99, “after a $290 savings.” It was the same brand, same model and sold by the same retailer. From a consumer perspective, I was delighted. Yet, the retail observer in me wonders, “What were they thinking? Who did that price-optimization calculation?”

The net effect was a markdown run on Black Friday (which based on the price of my TV should probably be renamed “Red Friday”) and an overall dampening of sales for the season. As The New York Times pointed out, “When customers did splurge, it was on electronics, appliances and home furnishings—which emerged, to Visa’s surprise, as the single biggest area of growth this holiday season.”

One wonders why Visa was surprised. A 36% discount (or 50% depending how you look at it) on a state-of-the-art TV is a big motivator for shoppers to make a purchase. And then, after spending another $300 on cables to support it, plus a few hundred non-discounted dollars on an iPod and accessories, it’s not surprising that consumers shied away from other holiday purchases, such as apparel.

Yet, this still begs the question: Where’d the science go? These dramatic Black Friday discounts may have been a response to Wal-Mart, The Home Depot and other retailers that announced $1,000 price points for plasma TVs prior to the launch of the season.

However it seems that retailers shot themselves in the foot. Instead of touting features and benefits, or even great customer service, some chains played the pricing game. They ran scared. They won the battle, but they lost the war.

Sure, retailers made me one happy customer this holiday season—and one disappointed retail observer.

© 2014