Sunday, November 30, 2014

Don’t Believe the Hype: Holiday Sales Won’t Make or Break the Economy

Retailers and their shareholders seems to be making an excessive number of profit, but the truth is, that isn’t so. Like for this year, the holiday sales generate $616.9 billion, the number sounds vast because in macroeconomic terms it is but this is only a portion of the overall measured economy. A statistic analysis shows from 1992 to 2013, December’s amount of sales aggregated to a 23% higher sale in comparison of the time period from January to October, meanwhile November’s was only 4%. In addition, there could be some error that is take in account for holiday sales. Therefore, one should only look at the net increase within the last two month. So if we look at it specifically, Americans spend only $106 billion but not $617 billion on these outdated or over timed products. Therefore the holiday sale does not generate as much income as you think for the economy. If one were to analyze this over the entire scheme of the United States as a best and worst case scenario the gap between expected results and calculated would be the $67 billion that was stated as a gap between both ends. Also as the media slowly creeps onto an age of disillusional decline in advertisement for Black Friday people will still be seen strongly believing in the sales. This is an interesting trend that must be further looked into.

How to make change marketing so that the economy could be better?

Are there any other ways to profit more other than holiday sale on the last two months of the year?



Rene Chen said...

I think the market is fine the way it is. If we were to change it, the economy could potentially be worse than the way it is now. In addition, implementation of a different market would not only affect the US, but other countries as well, so I doubt we could change the market so easily.

I don't really understand your second question about profiting, for retailers as whole cannot profit altogether. If one company gains massive profits, another will see a decline in profits. Thus, we see a race to the bottom effect in the markets, where different retailers try to compete to attract the most customers. For example, wal-mart's price match guarantee.

kendrick tse said...

I think to be able to change the marketing strategies to increase sales would be difficult. As of now, black Friday ads are on TV, computers, magazines, news papers and even youtube videos. Big companies and stores spend a lot on advertisements before black Friday to increase in store sales. To increase cost on their marketing strategy while still maintaining net sales would be difficult since black friday advertisements are everywhere around thanksgiving time.

To answer your second question I am going to assume you mean how can businesses profit more during the winter holiday season. I think that if stores were to increase the amount of time they offered big sales would increase the quantity of items sold. This way consumers will get items at prices they are willing to pay for and companies will be able to clear out inventory and prepare for next years items. But companies would have to experiment with which duration of sales time correspond with the greatest profit.