Retailers build discounts into initial prices

|By:, SA News Editor

Consumers who think they'll be getting huge discounts on Black Friday might want to think again. In the words of the WSJ's Suzanne Kapner, "those bargains will be a carefully engineered illusion."

Retailers and suppliers first work out the lowest price they can sell a product at and still make the profit they want, and then they jack up the "suggested retail price" so that the retailer can later offer a big discount.

Another tactic is for stores to raise selling prices just before the holiday season discount period kicks in.

Retailers: WMT, JCP, M, SHLD, JOSB, MW, KSS, BBY, TGT, HD

ETFs: XLY, XRT, VCR, RTH, RETL, PEJ, IYK, FXD, PMR, UGE, RCD, SZK, PSCD, FDIS, PEZ