For the last five to ten years, the day after Thanksgiving has been the busiest shopping day of the year in the United States. Big Box retailers open early with sales promotions that offer incredible savings enticing consumers to wait in long lines for hours on end. According to Fundivo – Black Friday Statistics, there were 141 million people shopping on Black Friday in 2013 and they spent about $57.4 billion. That’s nearly half the U.S. population! Now the tradition is spreading abroad. How have retailers continued to attract such an astounding number of consumers year after year?
The answer is promotional advertising, but be warned—the deals may not be as sweet as they sound. “Doorbuster” deals are one of the powerful advertising tactics that stores use. These are commonly used to advertise big-ticket items like flat screen TVs at unbeatable low prices. Offering these items at prices close to cost gets shoppers into the store where almost everything else is priced at normal margins. While some shoppers are able to obtain a big-ticket item, add-ons, installations and accessories often outweigh the savings they thought they were getting. Advertisements usually imply that only a limited quantity of an item will be available or that each customer may only purchase a set amount. This implied scarcity makes people think they have the opportunity to get something special, but it’s usually nothing more than a deceptive marketing tactic.
Unfortunately, most consumers who make the investment to wake up early, drive to a mall and wait in a long line outside a store just don’t know when to quit. Putting in all that extra effort translates into consumers who actually become inclined to purchase more than they initially intended. Consumers should recognize when they find themselves in an unprofitable situation, what economists refer to as a sunk cost, and cut their losses. This, however, is hardly the case on Black Friday. Most shoppers figure that since they already did all that work to get into the store, they might as well spend a little extra. The emotional investment causes people to overlook flaws an item may have and further rationalize expensive purchases.
Thanksgiving is mostly an American holiday so it is interesting that the tradition of shopping on Black Friday has started to spread abroad. Canadians had been traveling into the U.S. for Black Friday deals until retailers in Canada started to run their own promotions to entice shoppers to keep their spending at stores within the country. Recently, the United Kingdom, India and Brazil have started offering Black Friday discounts. Could this increasing interest abroad be a signal that all consumers, regardless of nationality, may be susceptible to the Black Friday hype?