If you showed up at Walmart between 6 p.m. and 7 p.m. on Thanksgiving, you could have ordered a Furby Boom! for $29, less than half the list price. It’s a sweetheart deal for people who apparently are on bad terms with their in-laws, hate the Pilgrims, and prefer Furbies to apple pie.
Yes, sad to say, there are such people in the world. Presumably, however, they are a small group with an unusual set of needs and desires, which is exactly why the sale makes economic sense–for both the retailer and the buyer.
Walmart introduced the one-hour sales for several items on Black Friday last year, and, “due to an overwhelmingly positive response from customers,” the retailer held them even earlier this year, on Thanksgiving itself. Other retailers are also holding sales at highly specific times on Thursday, such as the sales at Toys R Us between 5 p.m. and 9 p.m. or Kmart’s discounts on toys and televisions between 7 p.m. and 3 a.m. Friday morning.
The retailers have provoked the fiery wrath of the Internet, where nearly 1 million Facebook users have shared a “Boycott BlackThursday” pledge as of this writing. “A holiday created by our ancestors as an occasion to give thanks for what they had now morphs into a frenzied consumerist ritual where we descend upon shopping malls to accumulate more things we don’t need,” writes Matt Walsh at The Huffington Post. (Forbes’ Laura Heller, documenting the gradual expansion of Black Friday into Thanksgiving, thinks everyone should just relax and enjoy the consumerism.)
However much you care about Thanksgiving, these deals give retailers a clear opportunity to identify those customers who care more about prices.
As my colleague Lydia DePillis explained, the list price for many retail goods is a steep mark-up, so stores still turn a profit when they occasionally lower their prices. Retailers try to get as many people through the doors as possible by offering bargain-basement prices, but–so as not to forego profits unnecessarily–they’ll only offer those deals to those customers who really, really want them. Who want those deals so bad that to get them, they’ll leave a place setting empty at the dinner table on Thanksgiving.
The rest of the time, stores will offer somewhat higher prices. They’ll even artificially inflate them, as DePillis explains. She calls the entire scheme “an elaborate con”–and surely, many holiday shoppers feel that way.
On the other hand, and in all seriousness, you just might be a poor, single parent with a child who really wants a Furby Boom! that you can’t afford, in which Walmart’s one-hour sale seems like less of a fraud and more of a gift.
As Arnold Kling argued a few years ago, on the occasion of the first Black Friday after the financial crisis, price discrimination–what economists call this kind of practice–sounds bad but actually be a good thing. Since manufacturers get more money from consumers who pay more, more Furbies are available, while those who can pay the least aren’t excluded.
Perhaps spending time with one’s family on Thanksgiving has a sanctity that economics simply can’t account for. Even so, sales on Thanksgiving are now likely a permanent fixture of our post-industrial society. That’s the cruel and inexorable logic of capitalism.