Consumers are Sale-Desensitized, and for Good Reason

by on March 26, 2012 · 11 comments

I have a healthy dose of skepticism when perusing retailer and department store websites and seeing their reported percentage savings on products. I usually do my own research from competitors and ask around to see if I am reaping the advertised savings, or I do a quick gut check to see if it seems like a good deal. This is because I am suspicious that retailers make the “original” price whatever they wish, and then the percentage of savings is based off of that illusory pricing. And I don’t have to be suspicious anymore; there is now proof that those original prices are in many cases either inflated or never existed to begin with.

Retailers have Changed the Definition of “On Sale” to Mean “On Sell”

You’ve seen these before I’m sure—when there is an “on sale” price in red font that looks like a decent deal next to the faded gray original pricing which is almost twice the cost. Some sites even state the percentage of savings calculated from these two numbers. Check out Kohl’s, Macy’s, or Amazon.com, and you’ll see what I mean. The working definition of “on sale” (at least to consumers) is being reduced in price for a short length of time or under a specific set of circumstances, from an original pricing offered on the market. To most retailers today, products are on sale all the time. Well, by definition that just does not work. Most of the allure of a sale is you play by their rules and you get a deal that many other consumers are not getting. If products are on sale all the time, then the jig is up. Manufacturers are introducing items to sell at prices that only ever were the sale price—the price you are seeing in red is the original price.

One of the ways that I know this is because if you peruse the websites of any major department store right now, you will quickly see that almost every single item in their new spring line is “on sale”. That means hundreds of the latest items designers have worked on for this particular season in this particular year are going straight to a price that is supposed to be in the favor of the consumer (a price low enough that it puts the item on sale). Now, these items have just been put on the market in the last few weeks—it is not last year’s inventory—so it is unlikely that the price on them will ever go back up. Therefore, one must conclude that the sales price in red is actually the original price. And the “original price” listed in dour gray or black? It is merely a number chosen by the retailer for context and savings clarity.

Further Proof that ‘Original Price’ is Routinely Finagled

Aside from just common sense, I actually have proof that manufacturers and retailers are printing false original prices as a matter of business. MousePrint.org (I website I enjoy!) does a great job of detailing some of this proof that I am discussing below. JCP recently released a new ad campaign called Fair and Square Everyday Pricing based off of coming clean from past pricing practices where nearly everything was 50% off from its original price all the time. They are hoping to outshine their competitors by being truthful of their past practices, as well as pointing the finger to the other department stores that are continuing to give near-constant markdowns in order to attract consumers.

Amazon.com offers an even greater opportunity to see that original price inflation is rampant (it should be noted that Amazon.com has thousands of third party sellers that submit their own original prices; Amazon.com does not specifically set all of the pricing on its site). I recently shopped for baby shower gifts, so let’s take a look at how I did by purchasing baby products from Target versus Amazon.com.

  • I purchased Johnson’s baby powder (calming lavender and chamomile), 22 oz. for $3.89. There is a listing on Amazon for two of these same sized/same scent product with a stated list price of $11.12. The on sale cost to me would be $7.68, with a published 31% savings. Unfortunately, the list price is completely inflated. If I were to purchase two of these from Target, my cost would be $7.78. This merchant is selling two of these for $7.68, with savings of a whopping $0.10. Far cry from the advertised 31% savings!
  • I purchased Johnson’s baby shampoo (calming lavender), 20 oz. for $4.24. There is a listing on Amazon.com for the same size/type/etc. with a list price of $6.11. The actual sales price is $4.80…more than what I paid for the same product in a store!
  • I purchased Johnson’s baby bedtime bath, 28 oz. for $6.94. The same product is listed on Amazon.com for a list price of $12.35, and a sales price of $8.99…again, more than I paid for the same product in a store!

Is it possible that stores are selling these same products for the original price listed on Amazon.com? Yes, it is possible, especially for the Johnson’s baby shampoo which only had a $1.87 difference in price. But what about the other two products with between a $3.34 – $5.41 difference in price? For further proof, check out the outrageously priced grocery items MousePrint.org finds in the Amazon.com grocery section (Spoiler Alert: one item he found was a 20 oz. squeezable bottle of Heinz Ketchup with an original price of $47.49!).

I work in an industry where we rely on the companies themselves to report to us. It has to be this way, as there are not enough resources to oversee the day-to-day operations of every facility in the state of Texas. Let me tell you—sometimes it works out well, and sometimes it works out poorly. Just like in the industry I work, when perusing these retailer’s websites and counting on their honest and accurate representation of original prices you need to listen to your gut to see if you am getting an honest and good deal or not.

Have you noticed a retailer who routinely inflates the original price in order to offer a high percentage of savings? 

{ 7 comments… read them below or add one }

Anthony Thompson

I’ve heard and read reports about how many of these retailers announce special sales when, in fact, it’s nothing more than hype to get consumers to spend their money. I will check out the link. Thank you for the heads-up.
Anthony Thompson recently posted..Money is Your Friend – Phil Laut’s Seven Types of Savings Accounts

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Krantcents

I think you were talking about my older brother. He created a chain of furniture stores that marked everything up to mark it down. Everything was discounted all the time. The consumer had the impression they were getting a good deal or buying at a discount. In reality, it was a marketing technique. The segment of the market he was after liked this and it worked.
Krantcents recently posted..The 3 K’s of Success

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Karunesh @ chase-a-dream.com

Very true, Sale is a way get money out of the pocket of the consumer. Thanks for sharing :)

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Melissa@PersonalFinanceJourney

I find keep a price book is a pain, but it helps me avoid thinking I am finding a good deal when it is really nothing more than price finagling. Good post!
Melissa@PersonalFinanceJourney recently posted..5 Ways to Save on Interest on Student Loans

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FruGal

Thank you Melissa!

I do not keep a price book; I have a pretty good memory or internal gauge for when something is too high. Still…perhaps I am a victim of price finagling and don’t know it sometimes.

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MyMoneyDesign

Has anyone recently visited a furniture store or jewelry store? Do these places even have original prices? A local popular furniture store near us runs so many sales that we are completely desensitized to the real price (if there even really is one).
MyMoneyDesign recently posted..Weekend Wind Down 3/31/2012

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boops

Express.com super inflates their “original price” when having a sale or a BOGO sale. Rip Off

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