Watch out for these retail strategies when shopping this holiday season. This year is shaping up to be a bumper year for retail. The National Retail Federation, the industry group representing retailers, said that it expects sales in all of November and December – excluding autos, gas and restaurant sales – to hit $682 billion this year, up 4% on last year. Last year, America had its biggest online shopping day ever on Cyber Monday with $3.39 billion in sales, and that’s in addition to the $5 billion spent online on both Thanksgiving Day and Black Friday. Shoppers are bombarded by tricks worthy of a magician when they walk into a store and, some at least, are growing wise to them.
© Article’s author: Quentin Fottrell.
© Source: MarketWatch
© Pictures’ sources: AFP / Getty Images / Shutterstock
To avoid overspending, there are some rules of what not to do, says marketing consultant Martin Lindstrom, author of the book “Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy.” Rule No. 1: “Don’t bring your kids with you,” he says. They’ll help you spend 29% more than your budget, according to a study of nearly 3,000 consumers Lindstrom carried out. No. 2: “Don’t shop with your partner,” he says. He or she will make you spend 19% more than planned. No. 3: “Don’t use a shopping cart. People who carry their stuff spend 8% less.” No. 4: Carry $100 bills. “People are far less likely to want to break bigger notes,” he says.
People like to believe they’re getting a good deal, experts say, even if they doubt stores are being honest about the original retail price. But we don’t always know that we’re being manipulated, especially when navigating crowded malls.
1 retail trick: They treat you like a long lost friend
Graphic designer Daniel Drenger had an odd experience when he went to a J. Crew in New York two weeks ago to buy a pair of skinny jeans. “I wasn’t sure if the pants would get tighter after they were washed,” he says. “Out of the blue, the sales clerk told me his father was a cyclist and had large thighs, and had a problem finding jeans that fit.” Drenger was taken aback, but the story amused him and put him at ease – as if he were getting advice from a friend. After more sharing by the sales clerk, “I bought five pairs of jeans in different colors – and a bunch of other stuff too,” he says. (He decided to return half the loot a week later.) “Customers want more meaningful experiences,” Daye says. The overly-friendly staff at perfume counters are trying to fulfill that desire, he says.
2 retail trick: They sell you a reusable bag or supply large trolleys
Why not send a message that your company cares about the environment and – at the same time – ensure customers hit the stores armed with an empty bag? Ikea, Wal-Mart WMT, +0.22% and Whole Foods US:WFM are among the many retailers that offer reusable shopping bags or large trolleys. The bags sometimes even bear the company’s logo, providing free advertising for the store. (Ikea’s blue bags are instantly recognizable even without a logo.) But mainly the bags create a void that needs to be filled, encouraging consumers to buy more than they need, says Johan Stenebo, author of the book “The Truth About Ikea.” “There’s a reason why they’re so big,” he says. (Ikea, Wal-Mart and Whole Foods did not respond to requests for comment.)
3 retail trick: They give you a place to put your feet up
Some stores are even more thoughtful: They provide a path through the store punctuated with relaxing spaces for weary shoppers to rest their feet. Don’t loiter too long though: These rest areas are often placed next to displays of products that stores want to unload, says Stenebo, who worked at Ikea from 1988 to 2008 in a variety of roles from product development to management, and is also the former assistant to the group’s 90-year-old billionaire founder Ingvar Kamprad. “Retailers call this the hot-hot-hot spot for inventory that’s not shifting,” he says. That said, Ikea is a destination store usually situated on the outskirts of a city, and not a department store where people pop into for five or 10 minutes while running errands.
4 retail trick: They offer comparatively pricey luxury items
The “compromise price effect” is most often used by discount retailers and electronics stores that want customers to pay extra for a better camera or computer, says Michelle Barnhart, associate professor of marketing at Oregon State University College of Business. Here’s how it works: If a $225 Polo Ralph Lauren down winter jacket is strategically placed next to a slightly cheaper – but very similar – $195 jacket by Kenneth Cole, the customer might be tempted to opt for the latter and walk away still believing that he or she got a good deal. The “compromise price effect” can be effective in a store or even online, she says.
5 retail trick: They price everything one cent short of a whole number
Nobody believes they’ll be persuaded to buy something simply because it’s priced $9.99 instead of $10, but studies say otherwise. It’s called the “left-digit effect.” The difference of one cent can turn a window shopper into an actual shopper, according to a 2009 study by researchers at Colorado State University and Washington State University, published in the Journal of Consumer Research. In one test, the researchers asked participants to evaluate two identical pens: They priced one at $2.00 and the other $3.99 – amazingly, 44% of the participants chose the higher-priced pen.
6 retail trick: They offer to solve your life problems
The influence of the Apple Store AAPL, +0.01% can be seen in other electronic outlets from Best Buy to Microsoft MSFT, +0.18% Apple Store employees are not paid on commission and they often remind shoppers of that fact, says Carmine Gallo, author of “The Apple Experience: Secrets to Building Insanely Great Customer Loyalty.” Apple’s “genius bar” is a team of sales people designed to solve problems and empower the customer rather than (just) make sales, he says. It’s been paying off: There are roughly more than 500 million visits to Apple retail stores per year, according to market researcher Asymco; that’s roughly equivalent to the population of the European Union. (Apple did not respond to requests for comment.)
7 retail trick: They offer free shipping
Even retail pros fall for this: Free shipping is rarely offered without strings. Instead, stores set a threshold for each purchase, encouraging you to buy more. And they move that threshold depending on demand, says Brent Shelton, savings expert at deals website DealCrunch.com. “I catch myself looking for more items to qualify all the time,” Shelton says. “I tell myself, ‘There’s got to be something that I need.’ It’s pretty rare that my shopping will be exactly $35 or $59.” Walmart.com WMT, +0.22% offers free shipping on orders over $35, but Target TGT, -2.80% offers free shipping on all purchases on every purchase. Amazon AMZN, +2.58% offers free shipping on orders of $25 and over, plus free two-day shipping for all orders for Amazon Prime customers, which costs $99 per year.
8 retail trick: They use cheap items as the thin end of the wedge
Beware of half-priced socks, chocolates or bags of tea lights positioned next to the entrance. They are designed to break a psychological barrier and get consumers shopping, independent retail consultant Jeff Green. In retail parlance, they’re “open-the-wallet” items and they often appear as an elaborate and random display. Displays could include everything from plastic to-go cups to tea-and-cookie gift bags. U.S. retailers have also taken the “open-the-wallet” concept to a whole new level by promoting cheap stuff in October in the hope that people will keep shopping in November and December. “Americans are cautious,” Green says, so they need a little extra push to get them in the mood to spend money.
9 retail trick: They turn bargain hunting into a game
There’s a reason a minimalist design works at the Apple Store, but turns off regular shoppers in a store like J.C. Penney JCP, +0.62% Apple sells luxury gadgets and rarely discounts its prices, while J.C. Penney is a promotional store where people enjoy the voyage the bottom of the bargain basement, Shelton says. “Big box department stores make you dig around and see what’s on sale,” he says. “People feel like they’re on a treasure hunt and finding a bargain that someone else missed.” (Music is used to either keep people moving briskly through the store or to slow them down, depending on how busy they are, according to an analysis of big supermarkets by Casino.org. Plus, there’s no free shelf space at the checkout, leaving no room to dump unwanted items.)
10 retail trick: They pile on the accessories
Buying toys for kids can be a gift that keeps on giving: Batteries are often not included and – as Barbie might tell you if she could – dolls are more fun with a range of accessories. The same goes for adult toys, Shelton says. Case in point: The battery life of Apple’s iPhones has long been a bugbear for Apple fans. But customers still complain about the impact of apps and downloads on the phone’s battery life. One solution: Apples sells a Mophie Juice Pack Plus charger case ($120), which doubles the time to talk, text and surf the Web. Retailers are like Lieutenant Columbo, Shelton says, “There will always be ‘Just one more thing.’”