5 Discount Stores That Are More Expensive Than You Think
If you think you're getting a great bargain by shopping at big box stores that market themselves as purveyors of incredibly low prices, you may want to think again. Consider the alluring "loss leader" pricing strategy, for example. America's discount retailers draw you in by selling certain items at or below cost. But, they make up for lost profits on those dramatic mark-downs by selling you other, higher-priced products during that same visit. By the time you reach the register, the amazing savings you reaped from that doorbuster special is reduced by all the other higher-priced items you purchased. (See also: How Retailers Manipulate You Into Spending More)
Stores use a variety of such techniques to make themselves only seem cheaper than they really are. Read on for our roundup of some of the big name stores that are more expensive than you think.
1. Walmart (WMT)
"Always the Lowest Price. Always." That's the original Walmart slogan. But the world's biggest retailer was forced to stop using it when the National Advertising Review Board ruled that Walmart's lowest price claim simply wasn't true. Perhaps a more accurate tagline would have instead utilized the word "sometimes."
Indeed, some of Walmart's items are priced lower than anywhere else. Those key products are strategically chosen commodities that customers like you tend to know the going price of. Therefore, you know a steal when you see one, such as 25 cent cans of Progresso soup or a Dyson upright vacuum for $369. Eventually, you see enough good deals and assume everything Walmart sells is cheap. Alas, it's not. If you pile up your shopping cart with a mix of good deals, bad ones, and regularly priced items, you've merely neutralized your big savings, while helping Walmart achieve its bottom line.
2. Target (TGT)
Though it caters to the fashion-forward shopper rather than the self-identified thrifty one, Target sells many of the same products as Walmart. In fact, 80 percent of the merchandise sold in Target and Walmart is identical, according to Charles Fishman, author of The Wal-Mart Effect. The two stores also offer the same discounts. A recent comparison by Bloomberg Businessweek found only a 46 cent difference between the two retailers per $100 of purchases. You'll save those 46 cents at Target, the analysis found, although Walmart usually wins independent price comparisons. (See also: How to Find the Secret Deals and Biggest Markdowns at Target).
3. Dollar General (DG)
Despite the name, not everything here is a dollar or less. And even when it is, you're not necessarily getting bang for your buck. Case in point: The price tag on bulk goods at Dollar General is often lower due to smaller unit counts, but they can be higher per piece. For instance, an analysis by the Wall Street Journal found a 28-pack of Pampers diapers sells for $10, or 35 cents per diaper, on Dollar General's website. But the same diapers on Walmart's website sells in a 180-pack box for $45.97, or 25 cents per diaper. So, yes, you can get diapers for less money at Dollar General. But they'll cost you 40 percent more per diaper than if you were to buy a bigger bulk package at Walmart.
4. Amazon Prime (AMZN)
The $99 annual fee you must pay to gain membership to Amazon Prime gets you free two-day shipping on selected products. If you're a fairly frequent Amazon Prime shopper, a membership should work out in your favor. But beware: As a Prime customer, you may not always be presented with the cheapest item.
A GeekWire analysis found that a search for a Hamilton Beach Slow Cooker turns up a Prime-eligible product that costs $49.95 for free two-day shipping. But if you were to click on more options, the same slow cooker is available from a different seller for $38.01 plus $11.99 for shipping, for a grand total of $50. In this case, as a Prime customer, your $99 membership fee would save you a mere 15 cents.
In another scenario, the analysis found a vacuum cleaner filter from Dirt Devil was actually cheaper if you didn't use your Prime account. The Prime item cost $13.49, but another vendor was charging $12.74, plus free shipping. Now, this isn't always the case. Often the Prime-eligible item is the cheapest one. But if you are a sporadic Prime shopper rather than a loyal one, or if you don't want to have to dig to ensure you're getting the best deal, a Prime membership might not be worthwhile for you.
5. Kohl's (KSS)
At Kohl's, sales prices aren't always what they seem. A CBS hidden-camera investigation conducted between November 2011 and January 2012 found that the discount retailer was in the habit of marking up items as much as $100 from earlier levels before putting them on sale. For Pattie Woody, the result is that the $202.99 sheet set she purchased at a 50 percent discount had actually been priced at $169.99 before the sale, the investigation found. The pre-sale markup meant that Woody really only saved 40 percent rather than the advertised 50 percent. In another example, a twin sheet set was listed at half off the original price of $89.99. But inside the plastic zipper, the earlier price tag read $49.99, indicating the sale was only a $5 savings from the original tag.