But something has always perplexed me about the annual end-of-the-year trek to local malls, and now websites, made by shoppers to purchase gifts for loved ones. At a time when demand for products is at its height each year, retailers offer consumers the most aggressive discounts.
This long-standing practice seemingly runs counter to the law of supply and demand. While product supply does rise at this time of year, demand also increases. If retailers trimmed back inventory levels and were less aggressive with discounting, would people buy less? Would gift giving cease if percent-off sales during the holidays diminished?
By way of comparison, look at the travel industry. During peak times when demand for flights and hotel rooms are high, rates for each rise. Try finding an affordable flight or room in Las Vegas during the Consumer Electronics Show or the weekend of the Super Bowl.
Not gonna happen.
But in the retail world, when consumer demand for, well… everything, is at its peak, prices are slashed.
It would be a fascinating sociological experiment to see how consumers would react if retailers held prices during the holidays and did not offer deep discounts. Topline sales would be off, but would profitability be better?
Yes, it’s a crazy thought and the chances of this happening are nil. But perhaps it’s good for a bit of conversation.
And since retailers are willing to slash prices, where can I get a good TV cheap?!
