Retailers are sharpening their techniques to make shoppers buy early and often. Here's what you need to know to keep more of your cash.
After several years of consumers clamping down on holiday spending, retailers are hoping to loosen their grip during this all-important holiday spending period. Why? Retailers can make up to half their profits in the fourth quarter, said Burt Flickinger of Strategic Resource Group, so there's strong incentive to pull out their best techniques to entice consumers to spend, spend, spend.
It's not the subliminal "Buy more!" message suspected in the piped-in department store music, but refined tactics to feed our impulse to buy.
Here are eight techniques that consumers should be on guard for when shopping, from free shipping (with a minimum purchase) to BOGOs to "unbeatable" sales. Some are blatant attempts and others lull shoppers into lowering their defenses.
Buy it in the dressing room. The walk from the dressing room to the checkout is a precarious one for retailers. Too often customers change their minds on the way to the cashier or they put the clothes back if there is a long line to pay.
Nordstrom, Urban Outfitters and Macy's are taking Apple's lead with mobile, hand-held checkout devices. Employees can swipe or scan credit cards, access the Internet and print receipts. More sophisticated tablet-like devices will also let employees check stock and suggest accessories.
Try me on. The TJX Company, which includes T.J. Maxx and Marshalls, places signs on some clothing racks saying, "Try me on." Shopping last week at Marshalls, Chris Kelly of Minneapolis said he's doesn't think the signs make him buy, but they do remind him to try stuff on before he buys. "Too many times I've taken it home without trying it on and had to return it," he said.
As shoppers head to the dressing rooms, they get a card with the number of items they're trying on and the phrase "3 Must Haves" instead of "3." It's a twist on a classic marketing tactic, said Richard Feinberg of Purdue Retail Institute at Purdue University. "Somebody in a position of authority, maybe a designer or even someone unnamed, is saying you must have this."
Want fries with that? The old line was "Do you need a shirt to go with those slacks?" Then Internet retailers such as Amazon and Netflix took it a step further with "collaborative filtering," developed at the University of Minnesota. It predicts future purchases based on what others have also bought. If you bought "The Big Green Egg Cookbook" on Amazon, it will suggest "The Barbecue! Bible" too. Soon, retailers will analyze random combinations of items that people buy online in an order, compare it to what others bought and find the similarities, said Hal Stinchfield of Strategic Promotional Marketing Insights in Orono.
BOGOs - but do the math. Shoppers like buy-one, get-one-free (BOGO) deals, which offer a 50 percent savings on two items, but retailers want us to buy more than two. Now it's "buy three and save 50 percent on the 4th." Buyers see 50 percent and think it's a great deal, said Flickinger, but they're buying three at regular price and getting a discount only on the fourth. That means you're really getting 12.5 percent off your whole purchase.
Free shipping. Maybe. Many items can be found cheaper online until shipping costs crash the deal. Online retailers lure us in with "free shipping" e-mails or banners, but there's often a minimum purchase of $50 or $100 or a limited time offer, said Limor Elkayam, founder and CEO of Dealery.com, a daily deal aggregator. To save on mailing costs, try Freeshipping.org or Freeshippingday.com (Dec. 16). Get free shipping on Amazon by doing a search for the item you want. Then click on "free super saver shipping" in the left column to show items that qualify for free shipping.
You like us. You really like us. Retailers have discovered the perfect one-two punch. Have us buy their product and serve as unpaid marketers, too. It starts with liking a retailer or a product on Facebook. For example, a retailer sells a video, but offers a discount or freebie if the buyer recruits three friends to buy it, too. If enough buyers reach a sales threshold, the retailer unlocks a code for additional discounts, said Lou Abramowski, co-founder of 8thBridge social shopping advisers in Minneapolis. "Consumers feel as if they're controlling their own destiny," he said.
Don't pass me by. Consumers don't browse like they used to, said Dave Brennan, co-director of the Institute for Retailing Excellence at the University of St. Thomas in St. Paul.
They shop only when they're looking for something, which means fewer visits. As a result, retailers need to bring the merchandise to the customers. Kmart and Wal-Mart use displays on wheels so they can quickly bring the merchandise to the customer instead of waiting for the customer to discover it. Wal-Mart has also brought back displays in the middle of the aisles to slow cart traffic for browsing.
Quick! The sale's almost over! Sales such as the former Dayton's Daisy or Jubilee sales used to last seven to 14 days, but those marathons have been replaced by one- or two-day sales. Some only last a few hours, like Banana Republic's recent Power Lunch sale.
"One-day sales heighten a sense of urgency. Consumers see it as a need to buy now and retailers see it as a chance to increase sales," said Feinberg. Some sales on Black Friday or Cyber Monday (Nov. 28) offer unbeatable savings, but if you miss a one-day, ask about future sale dates.