There are even more cut-rate deals on big-screen TVs, Keurig coffee machines, laptops and other products at retailers across Canada this year as U.S.-style Black Friday sales continue to gain momentum north of the border.
The event’s growth in Canada doesn’t automatically mean individual shoppers are saving more though, as retailers like Walmart, Target, Best Buy and the like resort to tried and true strategies that promise huge savings but lure many shoppers into spending more.
“Traditionally, the way it has worked is that they identify the big door-crasher item that most consumers are going to want,” Doug Stephens, analyst and principal at Retail Prophet, a Toronto-based consultancy.
It’s called “charm pricing,” where shoppers are lulled into thinking that because they’re getting such a good deal on one item, everything else in the store must also be a steal.
“So you end up buying a bunch of other stuff,” Stephens said. “Companies like Walmart have made a science out of this.”
Another tactic employed by store operators: elevate the suggested retail price, then advertise a deep discount. “What you’ve really done is marked it up to begin with to a suggested retail price that is basically fictitious and you’d never sell at that price,” Stephens says.
Big ticket items this year consist of the usual fare, as TVs, electronics and appliances top the list of bargains.
Walmart Canada’s Black Friday sale is offering up RCA 46” TVs for $388, Keurig coffee makers for $68, iPod Touch for $197 and HP Notebook laptops at $328 among other bargains.
WATCH: Black Friday at Toronto’s Eaton Centre
Canadian retailers are succumbing to the tradition out of necessity, experts say.
A higher Canadian dollar in recent years has seen cross-border shopping soar, and in order to keep pace with U.S.-based competition, local retailers are adopting U.S. sales tactics, experts say. It’s also another opportunity to juice sales while consumer spending remains relatively healthy.
Canadian retailers more accustomed to a Boxing Day sales strategy are still fine-tuning efforts, but are competing head-to-head with Walmart and fellow U.S. retail giant Target with competitive offers.
Canadian Tire Corp. is offering Keurig model for $79.99, RCA 32” TV for $198.99 and a DeWalt drill and driver set for $199.99, down from $299.99.
Retailers’ Black Friday strategies appear to be working, according survey results published by BMO this week.
The bank survey shows 47 per cent of Canadian respondents will be enticed to buy something because of all the sales taking place, up from 41 per cent in 2012. Total Black Friday spending among shoppers is anticipated to grow by 15 per cent this year, BMO says.
The figures don’t suggest retailers are taking a hit on profits from all the deals.
A better picture will emerge once companies start reporting fourth quarter financial performances early next year. But a look by the Wall Street Journal at how U.S. retailers have fared in previous seasons provides some insight.
Black Friday discounting among U.S. retailers battling over lacklustre consumer spending after the recession has been fierce. Deals offered by 31 major U.S. department stores jumped by more than 60 percent between 2009 and last year, the newspaper found, while discounts grew to more than a third off the regular price on average.
Yet gross margins – the difference between what a retailer pays for the goods and what they sell them for – were virtually flat for the holiday season.
The Canadian operations of U.S. chains as well as Canadian retailers are attempting to pull off the same feat.
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