The Economics of Black Friday

Black Friday is the busiest shopping day of the entire year in America and kicks off the holiday season. Ironically, the boost in sales for stores is based on the marketing of the sales more so than the price itself. Sales skyrocket on this day and discounts abound.

Consumers will rush to stores, wait in long lines, and fight other customers just to get a phenomenally low-priced items. Stores know that Black Friday is more of an event in America than an actual sale. Stores bank on the fact that a large amount of consumers will show up to purchase an advertised item and leave the store with a number of other items they didn’t plan on purchasing. The low-priced item is called a loss leader. Electronics are the main purchase on Black Friday and it is no surprise that electronics are also the purchase that require multiple other items to work efficiently, such as cords, cables, and speakers. The television functions as the loss leader while the ancillary items are often marked up in price.

Many consumers have turned Black Friday into an event. People will often plan their holiday shopping around Black Friday. This particular Friday is the only Friday in the country that is guaranteed for a large part of the population to be off from work. The stores have become quite adept at marketing to the exact population they want to attract.  The vendors also use tactics focusing on scarcity, which makes people purchase items they may not need because they truly believe said item won’t be this cheap any other day of the year. While stores make tons of money on Black Friday, it is the marketing that makes the money, not the actual price of items.