Black Friday will be longer than ever this year with many retailers opening on Thanksgiving to draw the crowds. It will probably work. In a survey by the National Retail Federation, 23% of consumers said they planned to shop on Thanksgiving. Nearly 70% of shoppers – an estimated 97 million people – plan to venture into the traditional Black Friday frenzy. They will be lured by increases in both the quantity and quality of deals. According to Savings.com, the number of deals offered by 31 major department store and apparel retailers has increased 63% and the average discount has risen from 25% to 36% just in the last three years.
Yet despite more deals and better deals, the margin between what retailers paid for goods and the price they sold them for has remained about the same at 27.9% according to FactSet. What does that mean? It means that despite discounting more items and discounting them by larger amounts, stores are making the same level of profits on those same items. How could this be? Let Suzanne Kapner of the Wall Street Journal describe it for you:
Here’s how it works, according to one industry consultant describing an actual sweater sold at a major retailer. A supplier sells the sweater to a retailer for roughly $14.50. The suggested retail price is $50, which gives the retailer a roughly 70% markup. A few sweaters sell at that price, but more sell at the first markdown of $44.99, and the bulk sell at the final discount price of $21.99. That produces an average unit retail price of $28 and gives the store about a 45% gross margin on the product.
That incredible deal may not be so incredible after all. In fact, the shopper may just be paying what the item is actually worth, plus or minus a few dollars. So why not do away with all of the discounts and deals and just sell things cheaper? That’s exactly what former J.C. Penney CEO Ron Johnson tried until the disastrous results got him fired. Then the company returned to the discounts and deals by giving consumers an average of 60% in savings per item. Yet the average price paid by shoppers stayed the same despite the new discounts! What changed was the initial price of the item which rose by 33%.
There is something about human nature that cannot resist a deal, cannot ignore the prospect of getting more for less. It is so powerful that it has created a new holiday – Black Friday – that is slowly eating away at a traditional holiday – Thanksgiving. It is so powerful it drives shoppers to stores in immeasurable numbers and causes them to wait in lines they would flee from at any other time of the year. It is so powerful that retailers craft their pricing models to create the illusion of savings; to price items at what they’re actually worth would be a disaster.
Most of us can identify. We’ve walked into a store intending to buy nothing but walked out with an item on a sale we couldn’t pass up. We’ve spent more than we meant to because the deals were too good. We’ve bought things we didn’t need and even things we didn’t know we wanted on a discount-driven whim. Jesus understood this aspect of our nature. This is probably why he says in Luke 12:15, “Take care, and be on your guard against all covetousness, for one’s life does not consist in the abundance of his possessions.”
Even though Jesus says life does not consist in the abundance of possessions, we think that to some degree it does. Thus, we are never satisfied with what we have and always want more. This is why the bargains, discounts, and deals draw us like a moth to the flame. They promise us that – no matter our economic means – we can have more. If we take advantage of these deals we can have more possessions, more money, more happiness than we would if we passed them by. When we see the normal, inflated price and compare it to the flashy discount price the item becomes almost irresistible; if I buy this now, I can have more than I otherwise would.
This is not a complaint against holiday consumerism; nor is it a plea to stay home on Black Friday. It is an exhortation to all of us to examine what is going on in our hearts as we shop. To do as Jesus says and be on guard against all covetousness that may spring to life with every passing sale. To remember the words of the Apostle Paul in Philippians 4:11-13:
…for I have learned in whatever situation I am to be content. I know how to be brought low, and I know how to abound. In any and every circumstance, I have learned the secret of facing plenty and hunger, abundance and need. I can do all things through him who strengthens me.
As we venture into the holiday shopping season, let us go content with what we already have before the first penny is spent. Let us see through the illusions of the retailers enticing us to buy what we don’t need and want what we don’t have. Let us beware of subtly believing that life consists in having more.
If we stand guard over our hearts, our shopping bags may be a little less full, but they’ll contain better things and most importantly, so will our hearts.