The dirty secret of Black Friday 'discounts'

All Black Friday shoppers like to believe, want to believe, they've gotten the best possible deal on that must-have item of the season. However, the reality is those bargains are a carefully engineered illusion – it's all a matter of perception.

According to a Wall Street Journal investigative report, big retailers work backward with their suppliers to set starting prices that, after all the markdowns, will yield the profit margins they want. For example, the red cardigan sweater with the ruffled neck on sale for more than 40 percent off at $39.99 was never meant to sell at its $68 starting price. It was designed with the discount built in.

The manufactured nature of most discounts explains how retailers can seemingly slash prices on their best-selling items, yet still rake in the dough on Black Friday – aptly named for the single day a retailer can take sales numbers from red to black.

The WSJ reports, the number of deals offered by 31 major department store and apparel retailers increased 63 percent between 2009 to 2012, and the average discount jumped to 36 percent from 25 percent. However, during the same period, the gross margins of the same retailers were flat at 27.9 percent. Proving, it's all a matter of consumer perception.

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