Market Overview

The Truth about Black Friday Savings

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A quick Black Friday review, in case you missed our nation's annual Hunger Games-style retail competition:

~Amazon came away with the best deals, including a 32-inch LED HDTV that was on sale for $98 and sold outwithin minutes

~Walmart sold 1.5 million tablet computers

~Customers fought over a $0.29 washcloth

~Macy's apparently "won Millennial shoppers," according to Goldman Sachs


Now that we've all exhausted our finances snapping up the deals, it's time to do the math. How much money is lost to Black Friday? How much do people actually save? Let's take a look.

How much money is saved?

It's difficult to say how much money each family individually saves by participating in Black Friday sales, especially as this type of "savings" by its nature involves spending money that might not be spent otherwise. If a consumer purchases a discounted laptop, for example, is the purchase taking the place of a more expensive laptop, or without the discount would the laptop not have been purchased at all?

Adding Christmas into the mix complicates things, as we are all happy to spend money on gifts for our loved ones even if these gifts have been proven to be, among other things, an economic deadweight loss.

Still, let's look at the facts: in 2012, for example, Best Buy (NYSE: BBY) offered $100 off the Apple (NYSE: AAPL) iPad 2, $100 off the Amazon (NYSE: AMZN) Kindle, and $200 off the MacBook Pro. Not to be undercut, Barnes and Noble (NYSE: BKS) offered its Kindle competitor, the Nook, for only $79. These savings are not insignificant, especially for people hoping to shop within a budget.

On the other hand, you can't forget about the additional costs associated with Black Friday: the overnight trips to stores, often in remote locations; the cost of gas, cost of food consumed while waiting, cost of spending Thanksgiving evening sitting in a store parking lot instead of celebrating with your family. The food and gas alone will eat up the $100 you saved on that iPad; the economic cost of the rest you'll have to determine yourself.

Finding discounts in other locations

If your family is looking to save on your entertainment budget by purchasing a heavily-discounted television, for example, you would be equally well served by looking for deals in other areas. Instead of thinking hardware, think overhead costs. Equal savings could be found, for example, by avoiding the loss leader discount televisions sold on Black Friday and focusing on reducing cable and internet costs. If you use ATT (NYSE: T), using the ATT Uverse promo codes to fit your budget saves you $552 per year on your internet package, far more than any Black Friday retailer offers.

You can also look online for electronics and other items on future Cyber Mondays, when sales often surpass those of Black Friday merchants and there is no chance of accidentally being trampled. Next year, expect Cyber Monday to surpass its older sibling in terms of sales generated and revenue earned.

Who wins on Black Friday? The truth should be obvious: the retailers. The rest of us are just there to help push their sales into the black, discounts or not. Black Friday creep has now spurred several retailers to open their stores as early as 6 a.m. on Thanksgiving Day, formerly a day held in reserve for family celebrations. 

Next time around, if your family is considering Black Friday deals, consider Cyber Monday instead -- and don't forget to look for discounts that aren't associated with the big Black Friday sales. Look for discounts on monthly overhead costs, such as a cable and internet package, instead of a single discount on a television or computer. Saving money during the holiday season doesn't always have to be associated with a single infamous shopping day.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets


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