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.
I agree. This is the opposite and probably more accurate business model:
http://www.budgettravel.com/blog/spirit-ceo-we-owe-him-nothing,9339/
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)
Wouldn’t the added expense for employees, insurance, power, etc negate any advantage to being open on Thanksgiving anyway?
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.
Word around the campfire is wait until the week before Xmas. That’s when you will realize the best deals.