This past week I’ve been getting lots of emails in my in-box from major retailers with subject lines such as “Sneak Peek at our Black Friday Ad + Start Shopping Online Thanksgiving Day”. In effect, what they’re saying is:

Dear Customers:

Please join us for a special shopping day on Friday – the day that our company finally turns a profit. As you may know, for most of the year we retailers and our suppliers bide our time operating in the red until the day after Thanksgiving when holiday mania hits and you all madly rush out to buy up a bunch of junk at highly discounted prices. Come early.

Sincerely,

Your favorite retailer

I’m not sure what bothers me more: that companies now use this financial planning concept their marketing materials or that consumers aren’t completely insulted by implications of ‘Black Friday”. We all have friends and family who rush out to big box stores at 4 am the day after Thanksgiving to buy all their gifts and supplies for the holiday season. It doesn’t really matter what they buy, as long as it’s deeply discounted. Oh look, a foot bath for mom. Perfect, a new tie holder for my 93-year-old grandpa. Does this make mom or grandpa happy?

Destroyed Value in Gift Giving

In his new book "Scroogenomics" Wharton School economist Joel Waldfogel addresses the concept of destroyed value through gift giving. He was recently interviewed on Marketplace where he said: “The problem is the actual thing I get you is something that you typically place less value on than the thing that you would have purchased with the same amount of money. So the spending doesn't produce as much satisfaction as we expect spending to produce.”

Americans are estimated to spend $65 billion on gifts during the holiday season. According to Waldfogel, “people value stuff that they've received as gifts 20 percent less per dollar spent than stuff they buy for themselves. So multiplying that 20 percent times that $65 billion gets to you about $12 or $13 billion a year in destroyed value, or missing satisfaction in the U.S.”

While destroyed value due to missing satisfaction is bad for the pocketbook, what’s more concerning is its effect on our planet. We continue to use valuable resources to produce things that no one wants just to fill up our landfills.

Don’t get me wrong, I’m not opposed to gift giving. I love the holidays and I love it when I find that perfect gift for someone I care for. But I work at it. I think about the person I’m buying for and what do they like? What do they need? Sometimes I find that perfect gift. For others who have everything, I might donate money to their favorite charity, or take them out for a nice dinner. My goal is that they’ll get 100% value of what they receive from me and this gift will add value to their life, not end up in the "regift" pile.

Creating Value in Product Development

This same issue happens in product development. People are constantly coming to me with their product ideas, and I often find myself trying to talk them out of it because either the product idea isn't fully thought out or they don't have a clear distribution plan. Like give givers, entrepreneurs often place much more value on their idea that the marketplace does. As a result, many people spend years of their life and their entire savings on a bunch of stuff that that will just sit in their basement for years before they give up and move to a landfill. If all entrepreneurs take a step back and really think about their product and determine if the market really needs it, then our world will be a better place.

Happy Thanksgiving to all. On Friday, remember to be thoughtful about your purchases and don’t just buy things because they’re on sale. Let's all try make an effort to create and buy products that are of true value to ourselves, our loved-ones and the marketplace.

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