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Good Question: Why Are There Sales On Holidays Like Labor Day?

MINNEAPOLIS (WCCO) - All week long, television ads have declared "incredible Labor Day weekend events," otherwise known as sales.

Most holidays, like Memorial Day, the Fourth of July, Columbus Day and Labor Day, now offer all kinds of discounts from retailers, even though those aren't traditionally gift-giving times.

So, why are holiday sales so huge?  Good Question.

"Anytime the family gets together, any time we have time to shop, sales are an exciting thing because we get a lot more people and a lot more volume together," said Mark Bergen, a professor of pricing strategy at the University of Minnesota's Carlson School of Management. "Think of the holidays as a time when families get together and are able to shop and do things they can't do during a normal workweek."

On Monday, the Mall of America was packed with people, much to the surprise of many shoppers.  Some stores offered discounts of up to 40 percent off the entire store, while others offered discounts on particular items. Bergen said stores draw people in with sales because they want people to stop there first and spend as much money as they can before heading to another place.

"The key to their success, their very survival, is their ability to generate sales during holidays," Bergen said.

Bergen said the advertised sales can be a good deal for consumers, but to remember that not everything in the store is usually on sale.  Stores will weigh different factors when deciding various levels of discounts, including what will bring people in the door and what the store will ultimately make.

"They're going to have to make their money somewhere else," he said. "So look around at all the other things you might buy because it's right there, right in front of you. That's part of what stores are calculating -- not just the sale item you buy, but the whole basket that you purchase."

As for the stores that offer 20 percent, 30 percent or 40 percent off the entire store during Labor Day, Bergen suspects many of those store-wide sales are to get rid of summer inventory or older items. Once the holiday and its sale is over, he says shoppers will likely see more of the newer merchandise on the shelves.


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