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View Full Version : Is Black Friday a zero-sum game?


boffking
11-25-2014, 05:00 PM
Every year the stores try to open earlier. However, where I live, it is not legal for them to be open until 12:01 AM Friday. In states where Thanksgiving shopping is allowed, do the stores actually end up selling more by being open Thursday, or are they all just competing more fiercely for the same amount of business?

kanicbird
11-25-2014, 05:18 PM
Everyone opening earlier would seem to equate to a zero sum game however Black Friday has taking on a certain, almost celebratory, life if it's own. The more stores seem to go all out the more people want to participate in it.

dracoi
11-25-2014, 06:24 PM
I wouldn't say it's entirely zero sum. Black Friday deals whip up some hysteria that you wouldn't see otherwise. Once you get people to go out and shop, it's likely that they'll spend money even if they don't get any of the limited-quantity loss-leaders.

And while people report every year that they have a strict Christmas budget, it usually looks like this: Average anticipated budget: $250. Average actually spent: $450. So you can argue that the $200 difference between budget and actual is not part of a zero-sum game (or at least not all part of it).

Of course, even if it is a zero-sum game, making sure they spend money at your store is all the more important. If being open an hour earlier than your competitor gets them to spend money with you first, then that's enough motivation by itself.

Layaway falls into this category. Just getting people to commit to spending money with you is sufficient to win the game, even if they don't pay you until later.

Voyager
11-25-2014, 06:47 PM
Here is data on Black Friday spending for the past few years. (http://www.statisticbrain.com/black-friday-yearly-spending/) The question is, would this money be spent later, or does it increase the amount of spending?

I've been to one store on Black Friday once. It seems to me that Black Friday is quite inefficient, in that you could spend faster in less time on other days.

It would be hard to determine if Black Friday helps or hurts sales at other times since total Christmas sales are dependent on the economic environment.

Wesley Clark
11-25-2014, 07:54 PM
Black Friday kicks off Christmas shopping, which has other days of deals. Cyber Monday, the week before Christmas, the week after Christmas etc. Are all big sale periods.

I have no idea if more Friday spending means less Christmas week spending. I don't have stats on Christmas spending the last few years.

Little Nemo
11-25-2014, 08:12 PM
I believe the term is a Red Queen's Race. It's a situation where you have to put an increasing amount of effort in just to hold your current position.

SeaDragonTattoo
11-25-2014, 09:08 PM
I would love to know more about boffking's area and the illegal opening of retail stores on Thanksgiving. I'm just curious what the criteria is, are groceries allowed to be open? Gas stations? I'm intrugued and would like to visit this magical state (county? town?), as I wish all retail had to be closed on Thanksgiving (and a couple other holidays - not Christmas!).

RealityChuck
11-25-2014, 09:12 PM
It's probably not a zero-sum game, but it's counterproductive. The numbers aren't much use, since the only things on the chart that differentiates Black Friday and Thanksgiving Shopping is Internet Sales. There are no numbers that indicate if Black Friday is hurt by Thanksgiving sales.

Stores evidently assume that they will increase sales by bringing in people both days. But how many people do that? How many of your Thursday customers will come back the next day? I can't see it being that great a percentage, and your sales would hardly be that much different if you gave both days' worth of bargains on Friday.

The assumption is that the more hours you're open, the more money you make. Yet as a friend in retail once pointed out to me, for an event-type sale, people will show up whenever the event takes place and, assuming they have $450 to spend, they'll spend that amount over whatever time is available. People have only so much money to spend, and they'll spend it in whatever time is available for them.

zombywoof
11-25-2014, 09:37 PM
Large retailers have tremendous amounts of year-over-year, fine grained sales data to inform their policies - I would assume they are pushing the current trend towards ever earlier Christmas shopping/sales so heavily because they find it ultimately increases profits.

Kent Clark
11-25-2014, 09:59 PM
The easiest thing to do is compare shopping figures for years where Thanksgiving comes early vs. the ones where Thanksgiving comes late. Theoretically there shouldn't be any difference, but there are certainly enough cites from the retail trade (http://zone.tmcnet.com/topics/articles/346450-shorter-thanksgivingchristmas-gap-will-impact-holiday-shopping-2013.htm) that take it as a given that a short Thanksgiving-Christmas period means lower sales. Therefore, retailers must try to push the shopping period back. (http://www.dailyfinance.com/on/why-christmas-is-coming-early-this-year/)

Lukeinva
11-25-2014, 10:16 PM
"...I believe the term is a Red Queen's Race. ..."

Is this an English term? The English have such great expressions and I bet they have one for all the Christmas Holiday hype and such.

Senegoid
11-26-2014, 01:11 AM
Re: "Red Queen's Race"

Is this an English term? The English have such great expressions and I bet they have one for all the Christmas Holiday hype and such.

Never heard the phrase before, but having just now seen it, it's obviously a reference to
the Red Queen in Through the Looking Glass by Lewis Carroll, who said "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!" (http://en.wikipedia.org/wiki/Red_Queen%27s_race)ETA: Quite possibly one of the most often quoted passages in all of English literature, BTW.

Senegoid
11-26-2014, 01:20 AM
I believe the term is a Red Queen's Race. It's a situation where you have to put an increasing amount of effort in just to hold your current position.

Also an example of the Fallacy of Composition. Any player can gain advantage by opening on Thursday evening, so all retail stores are thus tempted to open on Thursday, but if they do, then nobody gets any advantage.

Examples of the fallacy from Wiki page (http://en.wikipedia.org/wiki/Fallacy_of_composition):
If someone stands up out of his seat at a baseball game, he can see better. Therefore, if everyone stands up they can all see better.
And perhaps even more relevant to the OP's question:
If a runner runs faster, she can win the race. Therefore if all the runners run faster, they can all win the race. Athletic competitions are examples of zero-sum games, wherein the winner wins by preventing all other competitors from winning.

ETA: In which case, if everybody has to work harder (by opening on Thanksgiving) and nobody gets any advantage from it, that's where the idea of Red Queen's Race comes in.

An example I've noticed is with airlines offering in-flight movies. Originally, one airline did it to gain an competitive advantage over other airlines. Then the next thing you know, they are all doing it just to get an equal shot at the same advantage, and now no airline is getting any advantage from that, although now they are all stuck with the expense of having in-flight movies.

boffking
11-26-2014, 07:00 AM
I would love to know more about boffking's area and the illegal opening of retail stores on Thanksgiving. I'm just curious what the criteria is, are groceries allowed to be open? Gas stations? I'm intrugued and would like to visit this magical state (county? town?), as I wish all retail had to be closed on Thanksgiving (and a couple other holidays - not Christmas!).
I live in Maine, and this law applies for the whole state. Any store larger than 5000 square feet must be closed on Thanksgiving, Christmas, and Easter.

kanicbird
11-26-2014, 07:27 AM
Black Friday is not a one day event, but goes way beyond it - it extends to Christmas (or other compatible holiday). It starts getting people into buying 'spirit' perhaps for another month. It starts the season and gets people to go along.

Black Friday also has people who will avoid shopping on that day, but that means they most likely will be coming in soon when it is less crowded.


So even if it's a loss, the people are now primed and ready to buy till Santa fires up the sleigh again.

LSLGuy
11-26-2014, 11:20 AM
The Red Queen's race is also commonly referred to as an "Arms Race". As soon as anyone starts building up their weaponry, everybody else must do the same just to stay in the same relative positions.

All of economics is riddled with arms races.

jtur88
11-26-2014, 11:30 AM
Nothing within the scope of capitalism is zero sum. Capital calls the shots. If there is a margin, it flows to Capital. If there is not a margin, it just doesn't happen.

md2000
11-26-2014, 12:34 PM
The Red Queen's race is also commonly referred to as an "Arms Race". As soon as anyone starts building up their weaponry, everybody else must do the same just to stay in the same relative positions.

All of economics is riddled with arms races.

Another way to describe it is OPEC. If everyone does the same thing, everyone gets their appropriate share. If some one member of the group (stores, oil producers) cheats, they get ahead... for a while. Then everyone else does the same, and they are all losers.

I see something very similar with car dealers. In many Canadian cities, car dealers were not open on Sundays. Obviously, Sunday is one of the few days when people have the leisure time to shop. However, once one dealer opens they may steal customers for a while; but then they all have to open and then they all sell the usual amount of cars while paying for an extra day of work.

chrisk
11-26-2014, 12:57 PM
Nothing within the scope of capitalism is zero sum. Capital calls the shots. If there is a margin, it flows to Capital. If there is not a margin, it just doesn't happen.

I'm not sure what those other statements have to do with Zero-sum games. (http://en.wikipedia.org/wiki/Zero-sum_game)

jtur88
11-26-2014, 04:26 PM
I'm not sure what those other statements have to do with Zero-sum games. (http://en.wikipedia.org/wiki/Zero-sum_game)

I'll try again. Business interests decide marketing strategy. They do not use tactics that are not expected to be profitable, nor to break even. If an event occurs, one can be sure that large capital interests have already determined that the outcome will be in their favor.

md2000
11-27-2014, 11:24 AM
I guess another part of the logic is that by jumping ahead of the other merchants (opening earlier, etc.) you will steal customers from them. Of course all the other merchants follow suit in later years, but the expectation may be that having stolen some customers, you keep them coming back to you for future sales - i.e. increase your customer base.

LSLGuy
11-27-2014, 01:37 PM
I guess another part of the logic is that by jumping ahead of the other merchants (opening earlier, etc.) you will steal customers from them. Of course all the other merchants follow suit in later years, but the expectation may be that having stolen some customers, you keep them coming back to you for future sales - i.e. increase your customer base.Agree some business folks think that way.

But the idea that you can attract loyal customers by offering loss-leader deals is an example of cognitive disconnect. The customers left their previously loyal relationship to come to you (figurative you, not literal md2000 you) in pursuit of a few bucks off. But somehow you expect them not to react the same way next time when somebody else offers them a few more bucks off.


I recall reading a pundit's indictment of Groupon and their ilk when that business model was first exploding on the scene, stock prices were giddy, etc. His comment was that Groupon was pitching merchants "Take a beating on a one-time deep loss leader & gain a loyal full-price customer for life" while simultaneously pitching consumers with "Never pay full price for anything again; buy nothing but loss-leaders for everything every day forever."

Obviously neither of those statements could both be true a majority of the time. His point being that one or the other side of the process would eventually decide it didn't work for them. At which point Groupon's business model would collapse.

md2000
11-27-2014, 04:05 PM
Agree some business folks think that way.

But the idea that you can attract loyal customers by offering loss-leader deals is an example of cognitive disconnect. The customers left their previously loyal relationship to come to you (figurative you, not literal md2000 you) in pursuit of a few bucks off. But somehow you expect them not to react the same way next time when somebody else offers them a few more bucks off.


I recall reading a pundit's indictment of Groupon and their ilk when that business model was first exploding on the scene, stock prices were giddy, etc. His comment was that Groupon was pitching merchants "Take a beating on a one-time deep loss leader & gain a loyal full-price customer for life" while simultaneously pitching consumers with "Never pay full price for anything again; buy nothing but loss-leaders for everything every day forever."

Obviously neither of those statements could both be true a majority of the time. His point being that one or the other side of the process would eventually decide it didn't work for them. At which point Groupon's business model would collapse.

I agree. This is the opposite and probably more accurate business model:
http://www.budgettravel.com/blog/spirit-ceo-we-owe-him-nothing,9339/
"Please respond, Pasquale, but we owe him nothing as far as I'm concerned. Let him tell the world how bad we are. He's never flown us before anyway and will be back when we save him a penny."

Another "reply all" oops, but basically the guy was right - the customer chose them for a few dollars' savings, and the next time they (or someone else) offers that saving, the customer has no loyalty and will take the lowest price.

(Which for example drives charging for luggage, seat choice, and meals etc. on aircraft. Whatever they can do to get money elsewhere so that it makes their posted ticket price cheapest on Expedia will drive sales - but those customers, like most sales-price motivated customers, will have no loyalty)

BaldDudePeekskill
11-28-2014, 12:36 PM
Wouldn't the added expense for employees, insurance, power, etc negate any advantage to being open on Thanksgiving anyway?

Little Nemo
11-28-2014, 05:51 PM
I'll try again. Business interests decide marketing strategy. They do not use tactics that are not expected to be profitable, nor to break even. If an event occurs, one can be sure that large capital interests have already determined that the outcome will be in their favor.The problem is too many people remain blind to a basic reality of how the free market works. There's nothing in capitalism or the free market theory that says every decision made by a business interest will be good. These theories openly acknowledge that business interests can and will make stupid decisions - the only thing the theories say is that good decisions will eventually drive out bad decisions.

Little_Pig
11-28-2014, 11:37 PM
Word around the campfire is wait until the week before Xmas. That's when you will realize the best deals.

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