The Financial Implications of Black Friday

Author: Kyla Lively

Black Friday is an American event stemming back from ages. Companies across the US have designated the day following thanksgiving as Black Friday. This is typically because a lot of people will have this day off work, making the shopping population larger. The day following Thanksgiving also signifies how close we are to Christmas, so Black Friday can be a good kick-off for holiday shopping. One specific behind the scenes aspect of Black Friday finances introduced in a Forbes article by Eric Mayefsy is price discrimination. Mayefsy explains this concept as how people's willingness to purchase an item may change based on circumstances. An example of price discrimination is that people with significantly different incomes may be more likely to cap off their max payment amount at different values. Price discrimination is used during Black Friday so that companies can lower prices to get a certain type of customer to buy a product they may have not previously bought. An example of this would be if Tarte released a new popular product a week before Black Friday for 75 dollars. Customer A makes a strong income and is willing to pay this amount for a makeup product. Customer B does not make as much as customer A and, in most cases, would not purchase this product. However, on Black Friday when Tarte lowers the price to $45 for the first 100 customers to enter the store at 6 a.m, Customer B is more likely to buy the product on Black Friday. They are willing to pay the $45, even if it means waiting in extreme lines. Customer A, who is willing to pay $75, might buy the product prior because they are content with that price point. In this case, Tarte is targeting the customer B group of people to increase the customer base for that company and product. Overall, price discrimination is a determining factor in the pricing of Black Friday items and the customers who participate in Black Friday.

How Supply Chain Issues are Affecting 2021 Holiday Shopping

Author: Hannah Bridges

Around the holidays, many people go online to purchase gifts for their friends and family. This year however, things are expected to look a little differently than before because of supply chain disruptions. This issue has been continuing to grow throughout the past couple of years, causing it to have a very large impact on the 2021 holiday season. One of the main causes of this problem is because now that people are spending a lot of time working virtually at home or in a hybrid work model, people have more time to sit at their computers and shop online, which has caused the demand for certain products to rise much higher than before. People who work to ship these products are extremely backed up, especially packages coming internationally in cargo ships. There are two main issues caused by this backlog that will make the delivery of holiday gifts much more difficult this year. One issue is that the prices of many products are rising, such as the price of cars, which are rising a lot higher than in previous years. The other issue caused by this disruption is that some items will become difficult to purchase and deliver, such as Playstations and the Nintendo Switch, because of a shortage in the supply of computer chips. It is suggested to start shopping for holiday gifts very early this year in order to get the products you're looking for. However, if you've waited until the last minute to make purchases this year, there is no need to worry because many companies are implementing quick changes to help customers such as free express delivery and being able to pick up items in the store. Additionally, if some stores don't have that item in person, it might be in stock online or at another location. This year may look very different when it comes to holiday shopping, however there is still hope in finding good items, it might just take a little more work searching for them than before. 

What is Causing Inflation Right Now?

Author: Kati Vombergar 

Recently, prices climbed by 6.2%, which is the largest increase since November of 1990. The higher prices were sourced from the increases in energy, shelter, food, and vehicles.

Recently, prices climbed by 6.2%, which is the largest increase since November of 1990. The higher prices were sourced from the increases in energy, shelter, food, and vehicles.

Prices grew by 4.6% over the last 12 months, the largest gain since August 1991. This climb is above the Federal Reserve's 2% target.

One thing to note is that inflation is not looking transitory. Transitory inflation means that higher prices are not structural and temporary. Fed officials have been telling others to expect higher inflation as the economy goes back to normal post-covid-19. This inflation means that more healthy price growth could happen over the long-run. However, Fed officials did note that inflation lasted longer than expected.

One of the reasons causing inflation is the decline in prices and spending throughout 2020 as lockdowns took place and people stayed at home. To make up for the loss in sales during shutdowns, some companies charged higher prices as lockdowns eased up. For example, the June 2021 airline prices were almost 25% higher than a year prior.

Consumers will likely continue to face growing prices. Investors hope that the Fed does not raise interest rates at a faster pace than expected, which can spook the markets. The questions to ponder are, how transitory is this inflation and how long can Americans continue to face growing prices...