You always see ads for furniture stores talking about what a great sale they are having, or see clothes in a store marked down. This doesn’t happen with other products nearly as much. Why is it these two that have all the pricing games? Do clothes and furniture even have a “sticker price”, or are the markdowns fictional?
Meaning if something is marked at “30% off! Only $70!” Did it ever sell at $100?
Furniture, clothing, mattresses. jewelry–these are among the highest markup items in the retail world. Yes, all retail prices on these items are fiction. A sofa with a tag price of $2000. probably costs the retailer $400. A dress which is retail $150 maybe costs the store $35. Thus 50% off sales and then even final close outs.
I knew a guy in the women’s clothing store business. He would open a store somewhere, set enormously high prices on everything. Let the store sit there for 6 months, then have a 75% off going out of business sale. That sale would last a year. And they kept reordering box after box of clothes to sell.
Note that the 75% off price was actually 4 times higher than the same clothes were selling for elsewhere. He made a fortune. Lots of psychology and “suckerism” here!
As for furniture, they have similar sucker - mark it up, sell at 75% off - sales. But also furniture takes up a LOT of space and sits around forever before it is sold. Low “turn around”. Not like Twinkies sell at a convenience store. Anyway with slow turn-over items, they typically mark it up 4x I am told. So have a lot of sale leeway.
I grew up in the clothing industry and this sounds like a tall tale to me. A good story, but I doubt that it actually happened. You can’t fool that many people to overpay for something that they already know that they can get at a better price.
It is common for businesses to run a ‘Going out of business sale’ for long periods of time. There doesn’t seem to be much point in waiting 6 months with outrageous prices to do that though. They would at least want reasonable enough prices to make some money in that 6 months. ‘Going out of business’ is enough of a lure for shoppers that you don’t need to prime them with a period of high prices first.
When I was a kid there were some stores in New York which were permanently going out of business. I think they finally made this illegal.
As for the OP, not all clothing is on sale all the time, but everything in a store circular is and the sale stuff is a lot more prominent than the non-sale stuff. Jeans, for example, are not on sale for most of the year, which is when I don’t buy them.
Clothing is often on sale because it goes out of style so fast. It has seasons, and clothing (ordered last fall) to arrive and be sold for the spring/summer season that doesn’t sell is useless – stores can’t afford to keep the money tied up in it by storing it until next year, and it will be out of style and un-sellable then anyway. So they put it on deeply discounted sale, to get what they can from it. (And since new clothes are marked up at 3-4 times their cost, the store can afford to sell it at quite a discount. and still not have much of a loss.)
And as Voyager noted, there are certain types of clothing that doesn’t go in or out of style. Like jeans, mens dress shirts, mens casual pants (khakis, chinos), etc. But these are marked up fro cost much less than the other ‘stylish’ clothes; compared to them, they are always ‘on sale’.
Yes. In NY, you have to get a license to have one, and there are limits as to how long it can run.
Same in Chicago.
Which is why you see banners in store windows that say:
GOING OUT for BUSINESS SALE.
But a few years ago JC Penney got a new CEO who tried something new: “fair and square” prices without coupons or fake sales. The store nearly went broke and he got fired. Like it or not, the retailers of this type of merchandise have trained their consumers to expect sales and it is unbelievably hard to untrain them.
I live in southeastern PA and along with furniture and clothing, every car dealer in the state has the lowest prices and the best deals.
Some, will even give you the car if they can’t beat another’s deals. I, often, wonder how many cars they gave away?
I’d say it’s somewhere between none and none.
There a clothing store in my city and my ex-husband checked it out , they had a shirt my ex like but it cost more than we wanted to pay. The store had sale during a festival my city has each summer so I went in to see if the shirt was on sale and the price has been marked up and put ‘on sale’ . The sale price was more than it originally selling for ! The store was hoping some tourist would
buy it thinking they got a good buy. There was a few things marked up this way. I never went back to the store .
If you go shopping for PCs, say, at stores with price match guarantees, you’ll soon see that every model at store X has a different model number from those sold at store Y, so you’ll never find a match. I think mattresses are the same.
I recently bought a Blazer which was marked for the equivalent of USD 1000. I bought it “on sale” for about USD 150. I doubt it cost more than USD 20 to make.
Of course May is a lousy time for sales where I am, the summer stuff has just arrived and the Winter stuff is long gone.
Yeah, same sort of thing with domestic appliances I have noticed. Obviously intended to defeat price matching/comparison, but it makes feature-based comparison also pretty difficult - different models in different stores all have a different 90% of the full set of features I would like.
Another reason: To confound people buying based on ratintgs. If Consumer Reports or some such recommends the model A724X, you can be pretty sure that Sprawlmart will soon have a model A723X. But beware, this might be a more cheaply made model with fewer features that won’t last as long.
I practically never find a CR recommended appliance at any store. But a lot of ones with similar numbers.
It’s not just training and mental biases like anchoring (although it is those things, too). Having stable prices without cyclical sales isn’t competitive with cyclical sales.
Cyclical sales, where something is regularly on sale but sometimes not, are price discrimination tools. When the item is not on sale, some people who are not as price conscious will still buy it, so you make a higher profit on them. So if you want to set a constant price for that item and not have sales, it has to be higher than the sale price, or you’ll make lower average profit than you used to.
But the people who are price conscious are generally going to wait for one of your competitors to have a sale and buy from them, because their sale price is lower than your everyday reasonable price.
The retail sector where having one price and not deviating from it works well is luxury goods. For one, some part of the value of a luxury good is in the conspicuous consumption of it, so there’s some pressure against marking them down too much or too often. For another, the buyers of luxury goods are generally more wealthy, thus less price conscious.
I assume that the constant fake sale tactic works well for things that people buy infrequently. Furniture is a great example. I’m not shopping for a new sofa every week, so I’m more likely to base my mental anchoring on the sticker price than on what I know the price is. If my grocery store tried to do the same thing with a gallon of milk, I’d figure it out pretty quickly.
Heh. Check out this item. Note the date. The first store on that list is one I pass on my way to work every day. They’re still in business. A couple of years ago, my wife and I wandered in to see if we could find a sofa that we could afford.
They wouldn’t even show us anything. “We only sell these items in the sets that you see here” they said.
I spent a lifetime in Indianapolis 1976-1979.
There was a store selling cheap crap furniture. It was always “Going Out of Business” or having a “Grand Opening Sale”.
Same building, same inventory. It would have a “Grand Opening” as ‘Credit Furniture’. After a few months, ‘Credit Furniture’ would have a “Going Out Of Business” sale.
Next day, ‘Big C Furniture’ would start a “Grand Opening” in the same space, same inventory.
They paid for a ton of crappy movies airing a 01:00.
Anyone offering a ‘price match’ on an item has a unique ID for the item.
And yes, it is widely believed (probably with good reason) that the big box will have Name Brand Model 621a for 70% of what the real store charges for model 621.
If a buyer for Wal-Mart comes to your shop and offers to buy all the output of a new factory in China at $X/pc, you will find a way to make a version which costs you .95X/pc.
Use a bushing in place of a bearing, make the handle straight instead of curved (extrude vs mold), etc.
Fro big-ticket items, write down make/model/whatever at the big box. Google that specific model.
Odds are all the hits you get are from that big box. That version of the model is made for only that big box.
Price matching is not entirely bullshit. There are cases where stores really do have items at different prices and will honor another store’s normal (not sale) price.
Much better to have customers come to your store and have a few of them buy one thing at a lower price if they did their homework (and maybe buy something else at full price) than to have them go to your competitor’s store.