Black Friday Discounts May Be an Illusion

Nov 26, 2013 8:23am

Morning Money Memo…

More than ever, Black Friday shopping could be a cat and mouse game between retailers and consumers. “Retail theater,” The Wall Street Journal calls it. The Journal notes that retailers often put higher regular prices on goods with the intention of marking them down to show a savings.

Those who use their smartphones to find the deepest discounts may not always get the lowest possible price. Retailers are fighting back against showrooming–when shoppers check out goods at a brick and mortar store and then buy them online.

“Retailers have accepted that showrooming is the new reality and they’re adopting some strategies to deal with it,” says Jenn Markey, vice president of marketing for the price comparison firm 360pi. “If you go into the store there’s often store promotions that you wouldn’t necessarily see online.”

Another strategy being used by retailers includes selling “a lot of private label goods.” There will be dozens of 25 percent off or 40 percent off signs greeting shoppers on Friday. But that doesn’t mean the deals on that day will be any better than during the rest of the holiday season.

Luxury retailers have been reporting strong gains in profits and sales. The latest example is Tiffany. Its third-quarter profit jumped 50 percent compared with last year, boosted by strong sales in the Asia-Pacific region. The jewelry and gifts retailer raised its full-year adjusted earnings forecast. Tiffany shares climbed 6 percent in premarket trading. Revenue at stores open at least a year, a key indicator of a retailer’s health, increased 7 percent, when analysts expected a 4.5 percent rise.

Investors have hit the pause button on the recent stock market rally. The averages closed mixed Monday and futures are down slightly this morning. For the first time in 13 years the Nasdaq index moved over 4,000 for a while. The market collapsed in 2000 with the end of the dot com bubble. But in the past few years tech stocks along with the rest of the market have been moving higher.

The genetic testing company 23AndMe has been ordered to stop selling a $99 mail order kit. The Food and Drug Administration says the Google-backed product’s kits could give false results that lead consumers to order unnecessary health procedures. The saliva testing kits are supposed to inform users about their genetic risk for dozens of potential health problems.

Insurance companies and advocacy groups are pursuing a new strategy to get more young people to sign up for health care insurance, making a big pitch to mothers. The New York Times says in its new campaign the AARP “is urging mothers to send e-cards to their children reminding them to sign up.” One e-card reads, “As a reward for signing up for health insurance, I’ll defriend you on Facebook.” Another group, Organizing for Action, is encouraging parents to have “the talk” about health insurance with their adult children.

Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow

AP mall shopping jtm 131017 Black Friday Discounts May Be an Illusion

AP Photo.

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