Candy
The demand for candy ebbs and flows over the calendar year. There are specific peaks around Valentine’s Day, Easter, Halloween, and Christmas.
Before these holidays, you can pick up candy with special shapes or wrappings that reflect the season — reds, pastels, black and orange, green and red.
Despite their outside decorations, the candy inside remains the same. It may be a bit smaller to offset the cost of the additional decorations, but the ingredients and taste are usually identical to the candy in non-festive wrappers.
Retailers know that people don’t seem to mind paying somewhat higher prices leading up to a big occasion, so they flood their stores with seasonal candy. Even though it is the same exact candy, it can be sold for a higher price during times of seasonal hype.
However, there is also a risk to this strategy. If retailers order too much candy in thematic garb, they may be stuck with perfectly good candy with a limited shelf life that nobody will buy until next year. They will likely be forced to cut the price (sometimes significantly) after the season passes to induce unnamed individuals who secretly eat out-of-season candy in the privacy of their own homes to clean off their shelves or empty their discount bins.
Let’s say a retailer buys seasonal candy for $1.00. In the preseason hype, they can sell plenty of candy for $1.50, making a quick 50% gross profit per unit. However, after the season passes, they are forced to cut the price to $.75 for the first week after the holiday and to $.50 starting the second week after the holiday.
As a consumer, you know it is exactly the same candy no matter how it is wrapped, shaped, or decorated. Is it financially better for you to be a festively-hyped candy buyer or an unnamed individual who secretly eats out-of-season candy in the privacy of their own home to avoid a public faux pas?
In the season of greed, there are plenty of traders who line up to buy stocks wrapped in fantastic headlines.
After greed runs its course, traders arrogantly dismiss inferiorly-wrapped stocks because they are out of season.
They are the same companies who still make the same products or provide the same services that are an integral part of our lives.
When you intentionally use the self-checkout lane after Easter to purchase the same candy at a much lower price while avoiding the social awkwardness of being exposed as an individual who secretly eats out-of-season candy in the privacy of your own home, please also reflect on other sale items that may only be available occasionally but could be much healthier for your long-term financial health.
We promise we won’t judge your candy-buying habits. Because we like cheap candy, too.
Quote of the week: Warren Buffett: “Be fearful when others are greedy. Be greedy when others are fearful.”
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
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