The Advantages and Disadvantages of Discounting Goods
Discounting is reducing the selling price of goods. Many retail stores use this method to try to sell more products and gain more profits. The advantages and disadvantages of discounting have brought a drastic debate. Some supporters believe that it has noticeable benefits, while others suggest that it perhaps does more harm than good. In this essay, I will review both the comments for and against discounting goods to boost sales.
The advocators encourage discounting goods to attract more consumers and make more profits for the stores. For example, Black Friday is the day after Thanksgiving in the United States. It is the time when retail stores give the most discounts in a year [1]. On evidence of research conducted by Miller [2], “nearly 20% of annual retail sales occur in November and December.” By presenting and offering excessive discounts, the customers’ willingness to participate in this shopping feast is drastically encouraged. Since Black Friday leads the Christmas shopping season which is right before the end of the year, most of the retailers view this discounting holiday as an important opportunity to push for a profitable year and break the sales records. To accomplish their goals, retail stores may sell out a blouse which is originally $40 USD for $5 USD [3], and a big number of shoppers are likely to be motivated by the low price to do the purchase so that the margin of the retail stores can be increased.
However, some researchers indicate that discounting goods has effects that are less beneficial. Because of the large number of consumers, safety problems may occur. A stampede happened on November 29th, 2008 and caused one death and four injuries [4]. In addition, three people were killed and more than thirty injured at the supermarket Carrefour in Chongqing, when the shop was offering 20% discounts on cooking oil [5]. Customers may have a high expectation for the low price [6], so many shoppers stand in the queue waiting for the store to open
The advocators encourage discounting goods to attract more consumers and make more profits for the stores. For example, Black Friday is the day after Thanksgiving in the United States. It is the time when retail stores give the most discounts in a year [1]. On evidence of research conducted by Miller [2], “nearly 20% of annual retail sales occur in November and December.” By presenting and offering excessive discounts, the customers’ willingness to participate in this shopping feast is drastically encouraged. Since Black Friday leads the Christmas shopping season which is right before the end of the year, most of the retailers view this discounting holiday as an important opportunity to push for a profitable year and break the sales records. To accomplish their goals, retail stores may sell out a blouse which is originally $40 USD for $5 USD [3], and a big number of shoppers are likely to be motivated by the low price to do the purchase so that the margin of the retail stores can be increased.
However, some researchers indicate that discounting goods has effects that are less beneficial. Because of the large number of consumers, safety problems may occur. A stampede happened on November 29th, 2008 and caused one death and four injuries [4]. In addition, three people were killed and more than thirty injured at the supermarket Carrefour in Chongqing, when the shop was offering 20% discounts on cooking oil [5]. Customers may have a high expectation for the low price [6], so many shoppers stand in the queue waiting for the store to open
References: 1. L. Simpson, L. Taylor, K. O 'Rourke and K. Shaw, "An Analysis of Consumer Behabior on Black Friday," American International Journal of Contemporary Research, vol. 1, no. 1, pp. 1-5, 2011. 2 3. J. B. Thomas and C. Peters, "An exploratory investigation of Black Friday consumption rituals," International Journal of Retail & Distribution Management, vol. 39, no. 7, pp. 522-537, 2011. 4 /2008-11-28/local/17910475_1_wal-mart-worker-long-island-wal-mart-jdimytai-damour [Accessed November 23, 2012]. 5. BBC, Three die in China sale stampede, 2007. [Online] Available: http://news.bbc.co.uk/2/hi /asia-pacific/7088718.stm [Accessed November 27, 2012]. 6. B. Milavec, An Analysis of Consumer Misbehavior on Black Friday. Newark: University of Delaware, 2012. 7 8. N. Ridgway, Black Friday Sales Hit Record, 2011. [Online] Available: http://money.cnn.com /2011/11/26/pf/black_friday_sales/index.htm [Accessed November 27, 2012]. 9. A. Davidson, Could Every Day Be Black Friday?, 2011. [Online] Available: http://www.nytimes.com/2011/11/20/magazine /adam-davidson-inflation-solution.html?_r=1&partner=rss&emc=rss&pagewanted=all [Accessed November 23, 2012]. 10. D. P. Breman and L. Lundsten, "Impacts of large discount stores on small US towns: reasons for shopping and retailer strategies," International Journal of Retail & Distribution Management, vol. 28, no. 4, pp. 155-161, 2000.