THE "DIRTY SECRET" OF HOLIDAY DISCOUNTS

This past weekend, nearly 150 million Americans braved Black Friday spending at least $57 billion dollars in pursuit of the sale. Yet evidence suggests that the idea of a sale price is largely artificial. So why do we have such a Pavlovian response whenever the word "doorbuster" is used?

Last week, the WSJ published a story, "Dirty Secret of Black Friday 'Discounts'," pointing out that although the number of deals offered by 31 major retailers increased by 63% between 2009-2012, their profit margins all stayed the same.

The reason that holding so many sales hasn't bankrupted these companies is because they're illusions. Retailers' margins have stayed the same because the average list price — the price the item is eventually discounted from — has skyrocketed.

It's almost all mental. Retailers are required to sell their products at the list price but those prices are quickly discounted. And very few people ever actually pay that list price — former JC Penney CEO Ron Johnson said in 2012 that the department store sold less than one in 500 items at full price.

The Journal provides a great example with a television listed on Amazon.

Amazon is featuring a Samsung 60-inch HDTC in its 2013 Holiday Gift Guide. The TV is selling at a 45% discount to its list price of $1,799.00. But according to Decide.com, a price-tracking firm, the TV hasn't sold for anywhere near the list price in months. The most it sold for in the past 8 months was $1,297.85. As recently as October,it was priced at $997.00, about the same as its current sale price. 

Over at the Atlantic, Alexis Madrigal writes about a Black Friday deal at Macy's for a $334 blender discounted to $200.99. Madrigal searched for the blender with other retailers and found it selling for below $200. Then he found Macy's pricing policy.

"Regular and 'Original' prices are offering prices that may not have resulted in actual sales."

But it's an illusion we don't want to let get of. Retailers have no choice. We won't let them. When Macy's tried to cut down on coupons in 2007, customers stopped shopping there.

So why aren't we looking at the prices instead of the fake discounted percentages? Why do we need so badly to be lied to? And why are we participating in this, forcing low income employees to give up Thanksgiving dinners and risk their lives for minimum wage for pretty much nothing?

At Ivory Row, we won't artificially inflate prices in order to create the illusion of a huge discount. Our philosophy is based on offering our customers the best possible price on cashmere every day. By eliminating all traditional middlemen and brick-and-mortar costs, we're able to pass these savings on to you directly.

That's been our philosophy since Day One...and it always will be.