Everyone knows that one store where there’s always a good deal to be had, a shop with frequent markdowns of 20, 40, even 60 percent. But the bargains might not be nearly as good as they appear. Constant deep discounts can be a sign of deceptive — and perhaps illegal — pricing strategies.
In fact, the city of Los Angeles earlier this month sued four major retail chains — Kohl’s, Sears, Macy’s, and JC Penney — for allegedly misleading customers through false sales prices. Kohl’s, for example, offered a particular dress for $35, claiming that represented a 30 percent discount from the original price. The garment, however, was never actually on sale for $50, according to the legal filing.
This practice, called “false reference’’ pricing, is one of many psychological tricks retailers use to lure buyers. The strategies can work on even the savviest shopper — the human brain is simply hardwired to respond to many of these ploys.
Another technique is called “anchor pricing.’’ It involves placing more costly items next to more modestly priced products. For example, a $100 watch might seem pricey until you notice a nearby timepiece that costs $5,000. This approach also shows up on menus where an $80 premium lobster dinner is listed prominently above the $30 steak, as well as on shopping websites that automatically rank search results from highest priced to lowest.
Perhaps the most classic pricing ploy involves ending a price with a 9 — like $39.99 instead of $40. Most of us believe we are too smart to be influenced by such a transparent tactic. Yet studies show it remains an effective way for a retailer to increase sales.
Even the positioning and physical size of price displays have been shown to influence buyers. Research has shown that prices displayed in smaller type fonts, or without commas or decimal points, all feel lower to shoppers.
So how can you fight back? Budget and research. Know how much you intend to spend ahead of time. Then start exploring purchase options to understand the likely price range and how variations or features might affect the cost. The final step is the hardest and the most crucial: Trust your research, and stick to the plan.
Have a consumer question or complaint? E-mail Sarah Shemkus at seshemkus@gmail.com.
