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From Wirecutter: Don't Get Swindled on Black Friday

By The New York Times

Have you ever felt swindled by Black Friday "discounts"? In this episode from "The Daily" podcast, host Michael Barbaro speaks with Nathan Burrow of Wirecutter about unveiling true deals. Burrow explains how Wirecutter's team of journalists rigorously evaluates sales claims, using data to distinguish real bargains from misleading markdowns on inferior products.

The discussion delves into revealing retail pricing tactics like inflated list prices and manufacturer policies that restrict advertised prices. Burrow also shares insights on categories with the best and worst Black Friday deals, preparing listeners to shop Black Friday sales with discernment.

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From Wirecutter: Don't Get Swindled on Black Friday

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From Wirecutter: Don't Get Swindled on Black Friday

1-Page Summary

Wirecutter's Deals Review Process and Scale

Wirecutter's team, consisting of around 100 journalists, meticulously reviewed 147,712 potential deals last year but endorsed just 1,344 as truly good discounts, according to Nathan Burrow. They only recommend deals offering substantial savings on quality products compared to the lowest prices tracked over the year.

Identifying True vs. Misleading Deals

During sales like Black Friday, Wirecutter scrutinizes apparent discounts against inflated list prices. Burrow warns of discounts on lower-quality TVs that create the illusion of value. To avoid this, Wirecutter uses "street price" as a benchmark for genuine discounts.

Retailers may time sales before Black Friday to limit deeper discounts on the day itself, taking advantage of price protection policies that many consumers neglect.

Retail Pricing Tactics

Burrow explains that manufacturers' suggested retail prices (MSRPs) often differ from the actual "street prices" retailers charge. Retailers create list prices independent of MSRPs, using them to make discounts seem larger.

Minimum advertised price (MAP) policies restrict how low retailers can advertise, making comparison shopping harder. Algorithmic price matching also leads to a "race to the bottom" that rarely goes below MAP.

Product Categories with Best/Worst Deals

Burrow notes that small kitchen appliances and older electronics models often have the best Black Friday deals as retailers clear inventory. But the latest tech sees smaller introductory discounts – better deals come later.

Some brands like REI skip Black Friday, instead hosting their own sales events where customers can find the year's best deals on their products.

1-Page Summary

Additional Materials

Clarifications

  • Wirecutter's team of around 100 journalists meticulously reviews a large number of potential deals each year to identify truly good discounts. They focus on deals that offer significant savings on quality products compared to historical prices. This rigorous process ensures that Wirecutter only recommends deals that provide genuine value to consumers.
  • The "street price" is the actual price at which a product is commonly sold by retailers, reflecting real market value. It serves as a reference point for determining the authenticity of discounts offered by comparing them to this prevailing market price. Retailers may use inflated list prices to make discounts appear more significant, but the street price provides a more accurate measure of a deal's value. Comparing discounts to the street price helps consumers assess the true savings they are getting on a product.
  • Minimum advertised price (MAP) policies are set by manufacturers to establish the lowest price at which retailers can advertise their products. This helps maintain a certain level of pricing across different retailers and prevents price wars that could devalue the brand. MAP policies can make comparison shopping more challenging for consumers as retailers cannot advertise prices below the set minimum, leading to less visible price differences between sellers.
  • Algorithmic price matching is a strategy where retailers automatically adjust their prices to match or beat competitors. This practice is common in online retail and helps ensure competitive pricing without constant manual monitoring. It can lead to a "race to the bottom" scenario where prices are driven down to the minimum advertised price (MAP) set by manufacturers. Retailers use algorithms to dynamically change prices based on competitor pricing, demand, and other factors to attract customers and maximize sales.
  • Some brands like REI choose to skip Black Friday and host their own sales events to differentiate themselves from the typical Black Friday frenzy and to align with their brand values, such as promoting outdoor activities and sustainability. By creating their own sales events, they can control the messaging, timing, and discounts offered to customers, providing a unique shopping experience that resonates with their target audience. This strategy allows them to stand out in a crowded retail landscape and build stronger relationships with their customers who appreciate their alternative approach to holiday sales.

Counterarguments

  • While Wirecutter's endorsement of 1,344 deals out of 147,712 may indicate a rigorous selection process, it could also suggest a very conservative approach that might overlook some genuinely good deals that don't meet their specific criteria.
  • The use of "street price" as a benchmark is practical, but it may not always reflect the true value of a product, especially if the product is rarely discounted or has volatile pricing.
  • Timing sales before Black Friday could be a strategy to spread out demand and manage inventory more effectively, rather than just a tactic to limit deeper discounts.
  • The difference between MSRP and "street price" can sometimes be due to additional retailer services or bundles that justify the higher price.
  • List prices set by retailers might sometimes be based on genuine estimations of product value, rather than solely to exaggerate discounts.
  • MAP policies are intended to maintain brand value and retailer margins, which could be beneficial for maintaining service quality and ensuring business sustainability.
  • Algorithmic price matching can lead to more competitive pricing for consumers, even if it doesn't often go below MAP.
  • The assertion that small kitchen appliances and older electronics models often have the best deals could be too general, as there can be exceptions based on brand, model, and retailer.
  • The latest technology might sometimes have significant introductory discounts, especially if a manufacturer is trying to penetrate the market quickly or clear out inventory due to overproduction.
  • Brands like REI that skip Black Friday and host their own sales events may not necessarily offer the year's best deals, as this can vary greatly depending on the product and the timing of the sale.

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From Wirecutter: Don't Get Swindled on Black Friday

Wirecutter's deals review process and scale

Wirecutter's meticulous approach to deal hunting involves a large team and a selective endorsement strategy, ensuring only the best discounts are recommended.

Wirecutter's team reviews thousands of potential deals each year to identify the true bargains

The Wirecutter team, comprised of around 100 journalists specializing in different areas, dedicates extensive effort to separating the wheat from the chaff in the online marketplace. Over the course of last year, they meticulously evaluated 147,712 potential deals in their search for genuine bargains.

Wirecutter only recommends about 1% of the deals they review as truly good discounts

It is significant to note that, of the vast array of deals scrutinized, Wirecutter advocated for merely 1,344. This tiny fraction, approximately 1%, aligns with the pattern they've seen consistently year over year. Nathan Burrow, weighing in, emphasized the strict criteria for a product to be endorsed by Wirecutter—it needs to present a substantial discount on a quality product. Wirecutter does not simply compare prices to the manufacturer's suggested retail price; instead, they gauge whether the deal offered is equal to or bet ...

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Wirecutter's deals review process and scale

Additional Materials

Clarifications

  • Wirecutter's selective endorsement strategy involves recommending only a small percentage of deals that meet their strict criteria for genuine bargains. They focus on discounts that offer significant savings on quality products, rather than just comparing prices to the manufacturer's suggested retail price. This strategy ensures that Wirecutter's recommendations are based on real value and not inflated discounts.
  • Wirecutter endorses products that offer significant discounts on quality items, not just compared to the manufacturer's suggested retail price but also against the lowest price tracked throughout the year. They focus on deals that provide at least a 20-25% discount, surpassing the typical 10-15% off a regular street price. This selective endorsement process ensures that only the best discounts are recommended to readers.
  • Wirecutter evaluates deals based on whether the discount offered is equal to or better than the lowest price they have tracked over the year, not just the manufacturer's suggested retail price. They aim to ensure that the deals they recommend truly offer significant savings compared to historical pricing data. This approach helps them identify genuine bargains that provide value to their readers.
  • Wirecutter remains vigilant during high-stakes shopping events like Black Friday by focusing on identifying compelling and honest discounts, typically in the range of 20-25% off. They disregard app ...

Counterarguments

  • The rigorous selection process may result in missing out on deals that are time-sensitive or limited in quantity, which could be beneficial to some consumers despite not meeting Wirecutter's criteria.
  • The 1% recommendation rate could be seen as overly stringent, potentially overlooking deals that offer good value but do not meet the high threshold set by Wirecutter.
  • Specialization of journalists does not necessarily equate to expertise in deal evaluation, as the best deal hunters may not always be journalists but rather industry insiders or experienced bargain shoppers.
  • The focus on percentage discounts may not always align with consumer value perception, as some shoppers might prioritize absolute savings over percentage discounts.
  • The dismissal of higher percentage discounts based on inflated list prices may not account for the psychological satisfaction some consumers derive from perceived savings, regardless of the actual discount depth.
  • The emphasis on past price tracking might not always be the best indicator of a good deal, as new products or models without extensive price history could offer substant ...

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From Wirecutter: Don't Get Swindled on Black Friday

Identifying true vs. misleading deals

As consumers prepare for sales events like Black Friday, understanding the difference between an apparent bargain and a genuine deal is crucial.

Retailers often inflate list prices or use minimum advertised price agreements to create the illusion of deeper discounts.

Nathan Burrow warns shoppers that Black Friday may bring discounts on items of lower quality, especially TVs. It's common for retailers to advertise substantial discounts on these items, making consumers believe they're getting a deal when in fact the products are simply cheaply made.

To combat this illusion, Wirecutter employs the concept of "street price," which is the average everyday price of an item, as a baseline to determine if discounts offered are truly significant. Street price takes into account the usual pricing fluctuations and serves as a benchmark to recognize real value in discounts, avoiding the influence of sometimes drastically inflated list prices.

Retailers may strategically time sales before Black Friday to take advantage of price protection policies and limit the discounts they offer on the actual day.

Shoppers are urged to be diligent in researching the specific models and features of the products they intend to purchase. Some sale items may look similar to high-quality versions but differ in features or build, misleading consumers about their de ...

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Identifying true vs. misleading deals

Additional Materials

Clarifications

  • Minimum advertised price agreements are contracts between manufacturers and retailers that stipulate the lowest price at which a product can be advertised. Retailers agree not to advertise the product below this set price to maintain a certain level of pricing consistency across different sellers. These agreements help protect the brand image of the product and prevent price wars that could devalue the product in the eyes of consumers. Violating these agreements can lead to consequences such as loss of support from the manufacturer or even legal action.
  • The term "opaqueness of sales events" in this context refers to the lack of transparency or clarity in how retailers promote and conduct sales, especially around events like Black Friday. It highlights how retailers may use tactics like inflated list prices, misleading discounts, and timing strategies to make it difficult for consumers to accurate ...

Counterarguments

  • Retailers may argue that list prices are based on manufacturer's suggested retail prices (MSRPs) and that any perceived inflation is not intended to mislead but to provide a reference point for discounts.
  • Some Black Friday deals on TVs or other items may actually be on high-quality products, with retailers using the event to clear out inventory or offer genuine discounts to attract customers.
  • The concept of "street price" might not always reflect the most accurate measure of an item's value, as it doesn't account for new product releases, technological advancements, or seasonal demand changes that can affect pricing.
  • Timing sales before Black Friday could be part of a retailer's legitimate business strategy to spread out demand and manage inventory more effectively, rather than an attempt to limit discounts.
  • While some sale items may differ in features or build, they could still offer good value for consumers who do not require the premium features of ...

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From Wirecutter: Don't Get Swindled on Black Friday

Retail pricing tactics that make it hard for consumers to find good deals

Retail pricing strategies can be complex, and consumers may find it challenging to discern the best deals due to various tactics employed by retailers and manufacturers.

Manufacturers' suggested retail prices (MSRPs) are often divorced from the actual street prices retailers charge.

Nathan Burrow describes how retailers ignore manufacturer's suggested retail prices (MSRPs) in favor of setting their own pricing approaches. This results in the creation of list prices that are independent of the MSRPs. Often, MSRPs are used to give the illusion of a significant discount. Burrow refers to this strategy as another form of discount manipulation, which capitalizes on the perception rather than the reality of a deal.

Minimum advertised price (MAP) policies restrict retailers from openly advertising prices below a certain level set by manufacturers.

Minimum advertised price (MAP) policies are another layer of complexity that affects how consumers shop and compare prices. These policies can limit how low a retailer can advertise a product price, making it harder for shoppers to comparison shop and identify the true best price. Because of the restriction on advertising, consumers might not immediately see the most competitive offers and must put in extra effort to discover the actual prices retailers might be willing to offer.

Retailers algorithmically track and match each other's prices, creating a race to the bottom tha ...

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Retail pricing tactics that make it hard for consumers to find good deals

Additional Materials

Clarifications

  • Manufacturers' suggested retail prices (MSRPs) are set by the product manufacturers as a recommended price for retailers to sell their products. However, retailers often have the freedom to set their own prices, which can lead to actual street prices that differ from the MSRPs. This discrepancy can create the perception of discounts or deals when retailers price products lower than the suggested retail price.
  • Minimum Advertised Price (MAP) policies are set by manufacturers to establish the lowest price at which retailers can advertise their products. Retailers are free to sell the products below the MAP, but they cannot openly promote these lower prices. This strategy aims to maintain a certain level of pricing consistency across different retailers and prevent price wars that could devalue the brand or product. MAP policies can limit price competition in advertising, making it harder for consumers to easily compare prices and find the best deals.
  • Retailers algorithmically tracking and matching prices means that they use automated systems to monitor competitors' prices and adjust their own prices accordingly. This practice allows retailers to stay competitive in the market by quickly responding to price changes made by other sellers. By utilizing algorithms, retailers can make pricing decisions in real-time based on the data collected, helping them to attract customers with competitive pricing strategies. This dynamic pricing approach can create a fa ...

Counterarguments

  • Retailers may argue that MSRPs are merely guidelines and that their own pricing strategies are designed to respond to market conditions, competition, and consumer demand, which can benefit consumers by offering prices lower than MSRPs.
  • Manufacturers might defend MAP policies as a means to protect brand reputation and ensure that retailers do not devalue their products through excessive discounting.
  • Some retailers might contend that algorithmic price matching ensures fair pricing and prevents price gouging, as it keeps prices competitive and in line with market trends.
  • It could be argued that the race to the bottom is beneficial for consumers as it ensures that prices are as low as possible, given the constraints of MAP policies.
  • Retailers might also suggest that the complexity of pricing strategies is a reflection of a sophisticated and competitive market that ultimately serves to offer consumers a variety of choices and price points.
  • There is a perspective that the onus is on the consu ...

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From Wirecutter: Don't Get Swindled on Black Friday

Product categories with the best and worst Black Friday deals

Nathan Burrow shares insights into which products likely offer the best deals on Black Friday and which ones might not be worth the wait.

Deals on Small Kitchen Appliances and Older Electronics

Small kitchen appliances and certain electronics like TVs and laptops generally have the best Black Friday discounts. Retailers often aim to clear out their older inventory in these categories, which allows them to offer more substantial discounts.

Clearing Out Older Inventory

Burrow notes that many electronics are refreshed annually, leading retailers to unload older models at significant discounts as newer versions are released. Similarly, the higher profit margins on kitchen appliances mean that they can be deeply discounted during sales events such as Black Friday.

Latest Tech Rarely Sees Big Discounts

Shoppers looking for the newest high-tech gadgets may be somewhat disappointed during Black Friday sales.

Wait for Tech to Age for Better Deals

For those always seeking the latest technology, Burrow advises that Black Friday may not be the best time to buy. Products like the most recent iPhone or laptops with the latest processors might only receive small, introductory discounts. He suggests that these items should be given time to age on the market before better de ...

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Product categories with the best and worst Black Friday deals

Additional Materials

Counterarguments

  • While older electronics may be discounted, the models may also be outdated or lack the latest features, which could be a trade-off for consumers seeking current technology.
  • Deep discounts on kitchen appliances might not always equate to the best value if the products are of lower quality or if similar discounts are available at other times of the year.
  • The assertion that the latest tech rarely sees big discounts on Black Friday could be challenged by specific retailers or brands that use doorbuster deals on new items to attract customers.
  • Some consumers might prefer to buy the latest technology at a small discount during Black Friday rather than wait, as they value having the newest tech immediately.
  • Not all brands skipping Black Friday is necessarily ...

Actionables

  • You can create a personalized inventory tracker to monitor price drops on older tech models. Use a spreadsheet to list the gadgets you're interested in and include columns for the current price, Black Friday price, and post-Black Friday price. Regularly update it to spot the best time to buy based on historical pricing trends.
  • Develop a habit of following your favorite outdoor and adventure brands on social media for exclusive sale announcements. Since brands like REI and Patagonia have their own sales events, they often use their social media platforms to alert customers. Set up notifications for these brands so you don't miss out on limited-time offers.
  • Organize a community swap meet for gently used electronics an ...

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