I have always had a strict rule where you cannot start thinking about Christmas until after Thanksgiving. Likewise you cannot think about Thanksgiving until after Halloween, though I will allow booking the flights. The holidays should be separated out. Especially as Halloween is in the autumn and Christmas is in the winter, we should not start buying Christmas decorations in October. Massive retailers, however, do not see it that way. Each year the date and time for which they begin their holiday sales goes back earlier and earlier.
The day right after Thanksgiving, commonly known in the US as Black Friday, is the unofficial start to the holiday season. This is the day stores begin their Christmas sales and a day that is also known for very aggressive and over packed crowds. This year, however, stores have stated that the big sales will begin November 1st. For example, Amazon is naming November 1st “the official start of the holiday shopping season” and Wal-Mart is introducing “Rollback” prices on “20,000 items”, yet again starting November 1st.
The reason for all of this is competition. Retailers need to keep up with and beat their fellow retailers, otherwise they will lose buyers and demand for their products will decrease. The holiday season in particular is the most important time for retailers to step up their game. It accounts for 20 percent of the retail industry’s annual sales. This year’s holiday season, the National Retail Federation “forecasts a 4.1 percent sales increase to $616.9 billion” from last year.
The increase in price of food, an inelastic good, could also be a factor for the reason behind these massive sales. Consumers are not as likely to buy luxury goods because they have to spend more on inelastic goods. So while many people buy presents during the holiday season they are not as willing to spend large amounts of money, like they may for something as necessary as food. So retailers have to make the consumers feel like they are not spending as much, with discounts and deals. Unless retailers come up with these stellar deals and large discounts, they will not sell or make a profit.
How do retailers make money though, if they have these enormous sales so early on in the season? The answer to that question is magnitude of sales. Firms may be making a smaller than usual margin on the products being sold, but the larger volume of sales causes a large profit that makes the discounts worthwhile. Costumer satisfaction is also a key factor, as if they can find everything they need at Wal-Mart, and are satisfied with the product then they will not need to go to another retailer like Target.
There are many arguments against this tactic, primarily that Thanksgiving was originally a holiday for the family, without too much consumer excess. The same can be said about Christmas. By moving up the start of the holiday season from a consumer standpoint, it seems as if retailers are willing to go after the biggest profit no matter how absurd it seems.