TRUTHBUSTER.com

The term “doorbusters” is a cache word used in the retail world. Here is Wikipedia’s definition of a doorbuster:

“a very low-priced, or even free, item designed to draw people into a sale, such as during Black Friday. As such, items being sold at a loss to the retailer are common during doorbuster events.”

A couple of us on the Truthbuster.com come from the corporate world of retail, so we would like to expound on the lovely concept of busting doors. We hope this gets you in the mood for a very, merry Holiday season…

In most instances, doorbusters are loss leaders (items sold at a loss or very low margin), but the retailers count on these to bring in foot-traffic or click-traffic (online) to their retail space. Now, if the Wal-Marts, Penny’s, Targets, and Best Buys in the world all let these people hit-and-run, their day-end sales would look horrible on Black Friday. But that’s not that case.

In our minds, if we’re shopping on days with doorbusters, we’re looking for a deal. The price is irrelevant– as long as there is a deal to be had, we’re in! However, that mindset is used against us if we are also the “time-value” sensitive shopper. If we come out of the store with “All-I-Got-Was-This-DVD-Player-Despite-Waiting-In-Line-For-Five-Hours” t-shirt, the deal may seem a bit unsatisfying. Especially now that Black Friday has come and gone, we can think back about the four hours of fighting through lines and piles of people for $3 DVDs.

We here at Trustbuster.com are not experts by any means, but we all believe there’s more that goes behind a great deal. The lines on days with doorbusters will inevitably be long, so while you might have that screaming $30 microwave oven deal in your hand, you’ll probably pick up a $7 t-shirt, some snacks, and a stocking-stuffer while you’re at it. So while your doorbuster might have slimmed down the margin, your basket size of additional items will surely increase that margin to something more palatable for the retailer. Hopefully, both people end up winning. The consumer gets more bang for their buck, but the retailer, by luring you in their space, draws more buck out of you. If you’re okay with that, so are we. We’re loving our new $1000 1080p HDTV.

And for those who like to play with numbers.  The average margin for an electronics item like an HDTV is anywhere from 10-20%, depending on the brand, life-stage of model.  Margins for soft-goods like apparel and linens are much higher… ranging from 30-70%.  Even if a retailer sold an item for near at-cost (i.e. cashmere sweaters for $10, 5% margin), your additional items of scarf ($10, 30% margin), microwave ($30, 10% margin), and DVD (ten titles at $4 each, 15% margin) will increase the average margin to a healthy 10-15%.  And since the sheer quantity of items sold during doorbuster events during Christmas time are insane (retailers often expect 40%-60% of their sales from Nov-Dec alone), the retailers are living fat and happy.

Care to disagree? Feel free to leave comments for our team. Until next time…

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.