If a Canadian retailer were to offer Boxing Day (December 26, the day after Christmas, a major retail event in Canada) throughout December they might see their sales go up but they would also cannibalize higher margin sales and leave a lot of money on the table.
Why? The lower Boxing Day prices would motivate many price-sensitive customers that would otherwise wait until December 26th, increasing sales. But other customers, those less sensitive to price who would have done their Christmas shopping anyway, would also be paying the lower prices. They were willing to spend more and that difference represents lost profit for the retailer.
Not just North America - bargain hunters line up for Boxing Day deals in the UK.
The Boxing Day sale is a perfect hurdle that allows the retailer a way to sell the same product at different prices - the goal being to sell each product for as much as the customer is willing to pay.
The first part of the hurdle is the date - the day after Christmas. Most Christmas shopping is for gifts, and it is hard to buy gifts once Christmas has past. If your shopping can wait until December 26 it probably doesn't involve gifts you really need to buy.
A nightmarish experience - strange hours, exposure to the elements and heavy crowds.
The experience itself is another hurdle. As unpleasant as Christmas shopping might be shopping on Boxing Day is worse. It is common to see stores open at odd hours, lineups caused by the promise of short supply, and terrible crowds. All of this works in favor of the retailer – Boxing Day shopping is not for the faint of heart, or those that are only casual bargain hunters.
If you are willing to wait until after Christmas, get to a store at some strange hour and spend hours standing in the cold for the opportunity to fight enormous crowds for the chance to save some money... you have proven that you are a serious bargain hunter and earned your discount. The retailer successfully created a system where customers streamed themselves according to what they were willing to pay and got the best price from each one.