« Do online sales hurt in-store business? | Main | The falling labor force »

January 25, 2007

Why retailers discount remnants

After Christmas is typically a time when shoppers can find merchandise at what appears to be deep discounted prices. N.C. State University economist Mike Walden explains why.

"There are several reasons for this, why stores would want to sell these products after Christmas at much lower prices," says Dr. Walden, a professor of agricultural and resource economics. "One is they want to avoid storage costs. They want to avoid carrying those products in their warehouse, where they are subject to breakage and have to have security and obviously have to pay for the space.

"Secondly, the product -- if they did hold it until say next winter could be out of style, out of season, and people wouldn’t want it," he adds. "And thirdly, consumers probably don’t want to buy a product that is a year old, from the previous Christmas.

"So for all these reasons retailers do want to move their unsold items from Christmas, and the buyer who was able to wait and perhaps willing to risk not having the selection that they wanted can get great deals."

Posted by deeshore at January 25, 2007 08:00 AM