Wal-Mart vs. Target defines Black Friday 2010
This Christmas continues shaping up as one of the most bargain-focused holiday seasons in recent memory, with both Target and Wal-Mart competing fiercely to be the cheapest toy seller in the country.
At the start of the season, Target was undercutting Wal-Mart’s prices on most popular toys. But Wal-Mart pulled a rather slick move to rectify that situation.
I recently read that a Wall Street Journal reporter called a Wal-Mart spokesperson seeking comment on why Target’s toys were so much less expensive. The spokesperson declined immediate comment but offered to give a call back shortly in reply to the question. When the call came, the Wal-Mart spokesperson told the reporter that the company had just cut its prices in the last half hour!
The moral of the story is that you can expect to find great bargains all over the place because competition is fierce. And the deals will not just be on a limited number of toys; you’ll find great prices on a wide array. Because there is no single “gotta have it” toy this year, that’s made the market far more open. Adding to the enormous enhanced competition you have Amazon and Toys “R” Us. The latter is opening 600 pop-up stores in vacant commercial space across the country to turn up the heat on competitors.
The thing about Christmas is that retailers already placed orders for their merchandise at the start of 2010, back when they were expecting a stronger economy. That means a huge inventory of electronics, clothing, toys and giftware of all kinds has already been baked in the cake. Discounts are inevitable.
That’s why it might make sense, if you can afford it, to buy toys now on promotion, rather than wait for the few weeks right before Christmas as most people traditionally do.
Black Friday Now Lasts All Week Long
For all the ballyhoo about Black Friday, the crown day in the holiday shopping calendar has been something of a bust for retailers. That’s led to a shift in how the day is being handled this season.
Historically, nobody outside the retail world was really familiar with the idea behind Black Friday prior to 2004. Then suddenly it became the thing to do to camp out overnight the day after Thanksgiving and wait for stores to open with their door-buster deals at 4 a.m., 5 a.m. or a late 6 a.m.
But talk about inefficiency. The crowds that waited so long would thin out by 9 a.m. and stores were more like ghost towns the rest of the day. And retailers probably didn’t make any money on the stuff they were selling anyway!
Then there have been the actual physical dangers of having large crowds of people mill around and then dash like mad to snatch up deals. During Black Friday 2008, a Wal-Mart employee was actually trampled to death by a mob of riotous shoppers in New York.
All of these factors have prompted retailers to rethink Black Friday. And in a new development, the deals will be available from right now throughout the remainder of the holiday season. No need to freeze your butt off in a long line overnight!
Skip the Extended Warranty, Keep the Savings
You’ll no doubt be asked to buy an extended warranty on some of your purchases this season. I want to reiterate my annual refrain that they aren’t necessary and are really just a waste of your money.
But it’s not just me saying this. Consumer Reports finds the failure rate of cameras during the first four years of ownership is four percent. That’s 96 percent reliability! Why would you waste your money on an extended warranty when the odds are so overwhelmingly in your favor that your camera will work perfectly for so many years?
With flat-screen TVs, the failure rate is four percent during the first three years of ownership. Vizio, once the king of off brands, has a failure rate of three percent. Ditto for Sharp. Samsung, a premium brand, has only a four percent failure rate. Obviously, the failure rate all around is miniscule, whether you’re buying name brand or off brand.
Appliances like kitchen ranges and microwave ovens are nearly as reliable, except for ultra-expensive appliances brands. For example, with kitchen ranges, the Hot Point brand has a four percent failure rate during the first five years of ownership. Yet the high-end brand Jenn-Air has a failure rate right at 20 percent!
Yet most people have a strange psychology about what they’ll throw their money at. The Journal of Consumer Research found that people are more likely to buy a warranty on something they enjoy than on something they don’t. So a business owner may not buy a warranty on operational equipment, but he or she will do so on a big-screen TV!
The reality is that extended warranties have massive costs and just aren’t a good investment. For example, The New York Times found one popular Nikon camera where the warranty was 27 percent of the purchase price. For laptops, a warranty can be up to a third of the sale price.
Remember, there is a free way to extend a manufacturer’s warranty. Many credit card issuers will double the warranty up to one additional year if you use their card to make the purchase. Now that’s the Clark Smart approach to spreading some holiday cheer to your gift recipients and your own wallet!