Retailer's 'Magic' Revealed! 11 Tricky Schemes to Get You to Spend More
It's a magical place — and I don't mean Disney World — I'm talking about retail stores. It turns out there is more magic involved than you would like to believe as a consumer. A part of us might enjoy this enchanting experience — the hypnotic feeling we get when we go shopping — only to wake from it when we get home with numerous shopping bags in our hands. But, it's time that we reveal this magic trick to prevent us from doing any more damage to our bank accounts.
Retailers use psychological "magic" to manipulate how we shop and what we buy. Just like a magician, they work hard to perfect these sleight-of-mind techniques and embed them all throughout the store in hopes of making you spend more.
So what makes us so susceptible to these traps? The first reason lies in human physiology. Our brains are just wired to perceive things in a certain way. It happens almost instantly. Therefore, in the absence of our willingness to combat it, we'll inevitably fall prey to it. This reason might leave us feeling hopeless, but as long as you are well-informed, you can pick up on these small pitfalls that you'll face during your shopping trips. As long as you're mentally prepared to take those biases into account, it may prevent you from succumbing to those schemes.
In addition to restaurants and supermarkets, I will complete the trifecta by introducing ways retailers makes consumers spend more while shopping.
Come with me as I go shopping at a department store in New York City and try hard not fall under the spell of this retailer's "magic" tricks.
I get emails about sales and offers throughout the year from my favorite retail stores. These enticing reminders keep customers returning to the store, which is the most important part of the equation. Retailers are willing to slash the price of your purchase, in hopes that you'll end up spending more than intended.
For example, if you receive a coupon for $15 off a purchase of $50, that kind of a deal will trigger you to start searching for something that you need to buy. The customer is incentivized to spend at least $50 with that coupon. Although these discounts actually make you spend more, you feel good about the purchase because it feels like you actually saved money.
Although the store makes $15 less than they would have, the $50 minimum purchase protects the retailer from losing money, regardless of what the customer ends up buying. In this case, making less on one item, given the chance that they will be making more potentially through the customer's other purchases, turns out to be profitable for the retailer. Also, the stores count on these savers to bring more fellow shoppers with them, because most people, including myself, do not go shopping alone. This additionally increases the potential sales for the store.
They layout of a store is crucial. This topic comes up repeatedly because this rule goes for every retailer, whether they're selling oysters or pearls. The goals are simple: try to maximize time spent in the store and contact with merchandise.
The most notable method of trying to make a customer walk around is by moving around high-demand items in the store on a regular basis. Customers often have to scour the store to find what they want, and retailers hope they'll discover something else to buy along the way.
Another trick is placing public areas toward the back of the building. For example, you'll often find elevators, restrooms, food courts, customer service desks, and other essential places furthest from the entrances.
Despite the fact that I'm completely aware of this trick, I can't beat them at their game. No matter which entrance I come in from, I have to go through a maze to get to where I actually need to go. To get to the women's shoes department on the 8th floor, I have to go to the other end of the store to catch the elevator. As I head forward toward the direction of the elevator, I hit thousands of products in my path, and one of them is bound to catch my eyes -- or my nose -- which brings you to my next scheme.
Walking on the ground floor of a department store, I'm showered by mists of luxurious perfumes being sprayed from all directions. As soon as I make eye contact with a lovely perfume lady, she continues to spritz a piece of paper and hand it to me as I'm walking toward her. It smells like heaven. I look down at the paper to see the brand and can't help but to turn back around to check out the bottle. Retailers aren't simply selling a bottle of perfume this way, they are also applying scent marketing.
The power of smell is hard to ignore. Smell is most capable of allowing humans to recall their memories and trigger certain emotions. Marketers exploit the association of smell to a memory and and steer us to make purchases. The basic concept is that pleasant odor will put you in a good mood, which will increase your likelihood of spending more money.
In some cases though, they take scent marketing a step further as they make different departments to give off the scent that would be most effective in raising sales. For example, swimwear sections often smell of coconuts (reminding you of the last time you were on the beach), while the kids department for baby clothing will smell of baby powder.
The music I hear at the store is different, depending on the department. The general rule is that slower music makes you take your time, while fast tempo music makes you move quickly through the store. Classical music is found to influence consumers into making more expensive purchases.
For example, at this particular department store pictured above, they'll go as far as having a live D.J. playing club music in the women's ready-to-wear section, where they have cocktail and party dresses. This type of music transports the consumer to an appropriate setting, making them more likely to make purchases, while remembering the last time they went to a club or party.
Turning on holiday music is another tactic. Christmas carols are found to put shoppers in the holiday spirit and feel jolly (like Santa Claus), and you know what Santa Claus does -- he gives gifts to everyone, so let the shopping begin!
You pass by the mannequin with an absolutely fabulous dress on. So you pick one up and head to the dressing room. Unfortunately, as lovely as the dress is, it just fails to look... complete. So you go back out with the dress in your hand to examine the mannequin and realize that the mannequin has the accessory advantage. It's carrying that adorable golden clutch bag with matching shoes, of course, and you can't forget that beautiful necklace elegantly hanging down its plastic neck.
Many people are susceptible to this type of shopping. They are pulled to an item, not for what it is by itself, but how it's packaged together as a complete look. A shopper looking to buy new pants will come across the perfect pair, only to find out that it needs the rest of the package to achieve the look. As a result, the customer is more likely to make those additional purchases to replicate the "total package."
This is a trick that many people fall for while shopping in a store. I have clothes that I bought and never wore because it just doesn't look right on me.
Why did I buy it in the first place? The answer is simple. It looked perfect at the shop. So what happened from the time I was at the store to when I got home? Many people don't realize the real culprit and end up blaming themselves and how much weight they gained, but truth of the matter is that it's not your fault. Really! It was the fun-house mirror.
Retailers infamously use optical illusion to trick their customers into spending more, by making them appear better. Usually, the changes are subtle, but once in a while, I'll walk into a shop that makes me look like a model. In closer examination of the mirrors, they use ones that create an optical illusion, or manipulate the mirror angles to help shoppers look their best.
What also adds to the optical illusion is lighting. Just like the fun-house mirrors, lighting can be used to make you look better, such as the type of lighting in the dressing room, which is sometimes dimmer than the rest of the store.
Lighting isn't only used to make people appear more attractive, it's also used to manipulate the merchandise.
Specific lighting is used in different parts of the department store make consumers buy more, as well by making the items appear more attractive. Such tricks includes the dimmed lights in the lingerie departments and clear bright white lights surrounding the cosmetics department.
Smart use of lighting by the retailer is found to increase profits.
We all have a pretty good idea about our sizes, yet recently, it has become exceedingly hard to know your exact size without trying the item on. In fact, many people wear a range of sizes, not because their weight fluctuates, but because many brands use different measurements for their sizes.
Retailers are intentionally labeling sizes to be smaller than they actually are. For example, a woman who used to wear 2 now finds herself wearing a smaller size. The important thing here is that her actual size didn't change over time, just the size that she has to wear. A couple of years later, she may find that the perfect size for her is actually a double zero "00." To accommodate for their manipulation of the size system, many brands had to add smaller sizes into their range.
Even menswear, where the measurement is not subjective, still show variations. For example, a pair of khaki pants with a label that says 32 inches (for the waist) will also range a couple of inches above the actual 32 inches.
What this does to the consumer's mind and emotion is gold for retailers. Believing that they have actually lost weight, or convincing them that they haven't gained as much weight as they believed will boost their self-confidence and make themselves feel good enough to make the purchase.
While you're standing there in front of the mirror (trying on a size smaller than you usually wear) you start to believe that you look a bit slimmer and taller than usual. Before you can question the mirror, a sales assistant walks by to let you know how great that outfit looks on you. You just got the confirmation that you were looking for.
It was the dress that was making you look so good. You make the purchase right away without any hesitation and feel good about your purchase.
According to a study conducted by American Express, it was shown that people were more likely to spend when they received good customer service -- about 13 percent more. This might be attributed to the sales associate's ability to boost the customer's self-confidence and provide reassurance by telling them what they want to hear.
People subconsciously believe that there is a strong correlation between the price and the quality. So naturally, consumers are more likely to opt for the item that is on sale for $100, versus an item that retails for the same price.
Retailers take advantage of this psychological flaw by initially pricing merchandise higher than their actual worth, knowing that they can always lower the price through sales in the future.
Popular items sold with such a tactic are jeans. The production cost of jeans are relatively cheap, but retailers price them at a high price with the planned intention to lower them during sale seasons, which will convince consumers to buy more and make them feel like they got a great deal.
Remember, no matter how big of a sale it is, merchants aren't losing money in the process. That should give you an idea of how much the item is actually worth.
Ready to make the purchase? You made your final selection and are free from the traps that might make you spend more or do something you'll regret, right? Wrong.
After they scan your many purchases, they're going to tell you the total cost. You stand there a bit surprised at how much you have spent. After the taxes and everything, you realize it's a bit higher than expected.
Then the sales associate asks, "Would you like to open up a department store credit card?" Before you can decline the offer, the sales associate continues, "It'll save you 15% on today's purchases and you will accumulate points every time you make purchases in the future."
You quickly calculate 15 percent off the final price. It's a substantial amount and you decide to sign up. This is a bad choice. Opening an in-store card to save 15 percent off the purchase at the time translates to much more spent in the future, about 30 percent more, on average, when you have a card with a specific retail store.
More essential financial tips
Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.
The article Retailer's 'Magic' Revealed! 11 Tricky Schemes to Get You to Spend More originally appeared on Fool.com.MyBankTracker has no position in any stocks mentioned. The Motley Fool recommends American Express and Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.