The 99-Cent Poinsettia
An analysis of Black Friday poinsettia promotions at the box stores.
December 28, 2009
I sifted through the Black Friday ads like many people Thanksgiving morning to see which products retailers were offering at mega-low prices. Big-screen TVs, digital cameras and navigation devices, many of which were displayed on ad covers, were some of the biggest draws.
The cover of Home Depot's Black Friday ad in my region had a different look: 6-inch poinsettias originally priced at $3.98 were being offered for 99 cents. There was a limit of 10 poinsettias per purchase, and the offer was for Friday only.
For the record, Lowe's also had a 99-cent poinsettia promotion on the cover of its ad, but Home Depot's was the one that shocked me most because of the space dedicated to the 99-cent doorbuster. The promotion, appearing near the top of the ad's first sheet with a block of white lettering that read "99¢," was the first thing my eyes were drawn to.
I'm not entirely sure why the promotion shocked me - 99-cent poinsettia promotions are nothing new at the box stores, and the loss-leader promotion will likely be back in another 11 months - but the ad struck me as one dollar stores might produce. And the products dollar stores provide aren't much to brag about.
Breaking It Down
I get the flip side of the argument: Black Friday promotions are one day only, designed to increase traffic and generate excitement. Most consumers don't race out at 6 a.m. to load their cars with poinsettias anyway. So sweating limited-time promotions in the short term may be a waste of time.
Then again, limited-time promotions set precedents when offered year after year. One is that those 99-cent poinsettias are cheap, and they must be of poor quality at 99 cents or their regular $3.98 price. As a result, consumers shy away.
Ninety-nine cent poinsettias also kill some impulse purchases. The consumers shopping at Home Depot and Lowe's on Black Friday aren't just purchasing one poinsettia. They're likely walking out with their arms full, and some will approach that 10-poinsettia limit for all its worth. If you think they'll return for another poinsettia weeks later, you're wrong. Why would they when they're already decorating every room in their house with them?
There are other scenarios unfolding, as well. According to Sunny Meadow Farm's Robert Schuler, a wholesale grower who no longer produces poinsettias, other retailers are often the ones trekking to Home Depot and Lowe's for the 99-cent doorbusters.
"Many of my old poinsettia retailers are buying those 99-cent poinsettias, bringing them back to the shop, fixing them up and getting good prices for them," Schuler said on FreshAirForum.com. "They still needed me for the big stuff like 10- and 12-inch (poinsettias), but even these high-value crops became unprofitable when you figure the growing costs of two to three plants on a 4- by 8-foot bench."
Box store vendors aren't exactly hurting, so it's hard to fault them for participating in a loss leader promotion. In most cases, vendors are paid a flat rate regardless of how retailers price them. Plus, the additional volume and increased sales of larger sizes is attractive.
Still, the 99-cent poinsettia diminishes the plant's overall value at all retail levels. Eventually, the standard poinsettia price may be 99 cents - or a price that makes growers reconsider the poinsettia as a crop altogether.