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FYI: retail theater

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Photo by Fox Photos/Getty Images

A recent Washington Post article acknowledges and further explains what I've begun to notice over the past year: retailers manipulate their starting prices to account for discounts and store sales, leading the customer to believe they got a bargain when they actually paid exactly what the retailer wanted to get for an item. It's deceptive, malicious even, but many customers either fail to notice or to don't really care that they're being played.
The number of deals offered by 31 major department store and apparel retailers increased 63% between 2009 to 2012, and the average discount jumped to 36% from 25%, according to Savings.com, a website that tracks online coupons.

Over the same period, the gross margins of the same retailers—the difference between what they paid for goods and the price at which they sold them—were flat at 27.9%, according to FactSet. The holidays barely made a dent, with margins dipping to 27.8% in the fourth quarter of 2012 from 28% in the third quarter of that year.

Read the full article here.

What do you think? Do retailers have a responsibility to be honest about their sales tactics and profit margins?

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1 comment

  1. […] to unsafe cotton farming practices, depressed factory wages, and unethical sales practices (see my post on retail […]

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