Discounts Are Kind Of ... a Lie

Most items that are 'on sale' were designed to sell at that price
By Kevin Spak,  Newser Staff
Posted Nov 29, 2013 2:54 PM CST
Discounts Are Kind Of ... a Lie
A shopper looks into the show window during a discount sale at a store in Seoul, South Korea, Friday, July 13, 2012.   (AP Photo/Ahn Young-joon)

(Newser) – If you couldn't bring yourself to rush out and do battle on Black Friday, no need to feel like you missed out: The discounts you'd be seeing if you were at the mall right now are what the Wall Street Journal calls "retail theater." Stores are not actually slashing prices on inventory that otherwise wouldn't sell. Instead they work with suppliers to set artificially high starting prices that will still yield the desired profit once they take, say, 50% off. The "discount" price is, in effect, the real intended price.

Since 2009, both the number of discounts and size of discounts at 31 major retailers have shot up, yet profit margins have remained completely flat. Some stores even increase prices right before the holidays; a Journal analysis showed prices rising an average 8% in the weeks before Thanksgiving last year for about one-fifth of the products analyzed. Customers are mostly rewarding the behavior, although a handful have sued, saying that items weren't offered at their list price "for a reasonably substantial period of time," the vague standard mandated by the FTC. If you want to avoid some of the sneakiest "pricing tricks" retailers use, check out this tip sheet from The Week. (Read more discounts stories.)

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