Happy Halloween! My wife and I just returned from our annual candy shopping to prepare for the trick-or-treaters who’ll be knocking on our door tomorrow. Yes of course we have waited until the last possible moment, couponed, loyalty clubbed and sale’d our way into the event as per usual! Ok, we’re a little bit obsessed with savings and that’s because we normally don’t stock up on Milky Ways and Snickers bars. Not that we don’t love our candy bars and treats. It’s just that between the two of us we’ve probably reached our quota allowed of them, and shamefully I reached my lifetime allowance of them in 1997. Thank goodness that the number of kids are growing in our neighborhood and we will be generous so hopefully no leftovers to tempt us. Suzanne won’t even let me open the bags until at least noon on October 31st!
But, truth be told, Halloween shopping is just the first of the many battles you will face over the next 60 days! The real shopping war is on right now and retailers are preparing to get every penny they can from you and here’s how!
The Tricks and Treats: How Retailers Do It
Halloween’s a time for tricks and treats, but no one likes getting tricked by retailers who make you spend more money! I’ve spent most of my working life inside retail stores starting way back in the early 1970’s. That’s when I began a job as an assistant buyer at R.H. Macy’s, a real learning experience for me as to exactly how a retail business is run and how it makes so much money. That knowledge was valuable then in learning my job, but it’s just as valuable today because it opened my eyes over the years so that I can deal with shopping in a much more intelligent way. I know the “tricks” and so that helps me zero in on the “treats”! There’s an old saying “the more things change the more they stay the same”, and that couldn’t be more true in the world of retail.
The One Goal That All Retailers Have
You know it…the one true goal of all retailers, marketers, sales professionals, and CEOs is to make you buy more than you planned when you shop. Retailers have an arsenal of sales tactics that may seem silly, but serve as heavy-duty artillery when it comes to persuading you to part ways with your cash. Remember the phrase accredited to P.T. Barnum when he said “a sucker is born every minute”? That’s where the tricks come into play.
Psychological warfare is the term I would use to describe what we all face every time we shop. Since we are entering the biggest shopping time of the year, the “holiday season”, it’s a good time to remind yourself not to fall for their “tricks” when you shop for your “treats”. While these retail tricks are not illegal, they are used to tip the scale to favor the retailer. With that in mind, let’s look at some really cagey tricks that retailers use.
Retail Tricks That Make You Spend More
1. Multiple-Purchase Pricing
Whether it’s your local grocery store or a bigger store at the strip mall, stores loves to run 5-for-$5, 10-for $10 and all the variations in between for promotions. Not only are the sale items a mere dollar each, but sometimes you even get the 11th item free. Talk about temptation! That’s almost a dozen products included in one purchase on sale and you can mix and match items! How cool is that? Well, maybe it’s cool.
It’s really awesomely cool for the grocery store when we load up on 11 items even though we really need only two or three or maybe even only one. It’s even better for them when those items regularly sell for only $1.09 anyway. For these kinds of purchases, clearing out their inventory for a fast turnover means quick profits and doesn’t tie up their cash flow.
I’m not saying that multiple-purchase pricing is always a bad move. It’s just that when we see something like 10 for $10 sales we always buy more items then we really need. That means a big ka-ching for the store! Sometimes you just need only one, not 10.
2. BOGO, B1G2, and B2G1 deals (Buy 1 get 1 free, etc.)
The big stores love BOGO! These deals work similarly to other multiple-purchase pricing. They entice you to buy more than you normally would.
Now, if you’re already planning to make a purchase and a second item is free, then, by all means, take the freebie. But if you find yourself suddenly justifying the purchase of an unneeded thing like say a pair of new shoes because of a BOGO ad, the marketers can pat themselves on the back for a job well done. Once again, their goal here is to move a lot of inventory quickly and at the same time make you think you got the deal of a lifetime! Believe me when I say if that were the case stores wouldn’t be doing it almost every day of the week.
B1G2 and B2G1 deals involve, respectively, buying one item and getting two free, or buying two items and getting one free. There is also another common variation that involves buying one item and getting the second for half off. So just use good judgment. I always say that if you buy something that you won’t ever use, it isn’t a bargain at any price!
3. Psychological Pricing
You would think by now we would be savvy enough not to be tricked by seeing the number 9 at the end of a price. And yet, we continue to think something priced at $19.99 is a much better deal than an item priced at $20.00. Known as “charm pricing”, ending sales tag prices with a 99 is only one way businesses use psychological pricing to their advantage.
When I operated my flea market venture years ago, I discovered that customers only saw the $19 dollar part on the sign and simply blocked out the .99 on it. Products priced just one penny higher prompted the buyer to say $20 dollars while $19.99 registered just $19.00 in their brains.
Some stores may also try to trick you into spending more by dropping the dollar sign completely or even putting a per-customer limit on how many you can buy to make your sense of urgency increase. It works. Who knew we could be so easily manipulated by a price sign or tag?
4. Bundled Purchases
Another silly way retailers persuade us to buy more is by bundling purchases. So as part of a special sales bundle, for example, you might get a printer and office software along with a laptop. If you need a printer and software, this could be a cheaper option than buying all three separately.
However, you might have a perfectly good printer at home, and maybe you only plan to use the laptop for Facebook and World of Warcraft. You don’t need Microsoft Excel for either of those things, so why spend a lot more for that trio when you really only want a laptop? Buying $1,200 worth of computer gear for only $900 sounds great, but if all you need is a $700 laptop, you’re $200 poorer for no good reason.
5. Free Shipping Offers
Online retailers know that many of us have an aversion to paying shipping costs, so they often use free shipping deals to hook us. However, these may come with a catch: you might have to spend $30, $50, $100, or some other minimum amount to get the free shipping deal.
How many times have you spent precious time searching for extra items to add to your order just to reach the amount needed for the free shipping? I’ll raise my hand and admit to spending an ungodly amount of time looking for a $15 item (that I really didn’t need or want) to add to my $35 purchase in order to get free shipping. In hindsight, I should have just stuck with my $35 buy, paid the $5 in shipping and come out $10 ahead. Lesson learned in hindsight. These retailers really know their stuff.
These are just five of the tricks that can affect your treats during the holiday shopping time frame. Next time we will look at five more retailer strategies.
Of course you should enjoy shopping and holiday traditions as many of us do. To really look forward to it can be both fun and rewarding. But it comes down quite often to what you can actually afford and budget for the holidays so that you can still feel “the good” and not be setting up a future of “the bad”.
Do you enjoy holiday shopping? How do you prepare so that you can save money and stay in budget?