How Stores Get You to Spend

Whether it’s clothing, groceries, electronics, or home goods, odds are that you spend more than you should when you go into a store. Why is this? It’s simple marketing. Stores are experts in running promotions and sales that get us to spend more money than we realize by making us think we are actually saving.

Some might call it silly marketing tactics, but the reality is that these sales and promotions actually work. For example, some stores offer free shipping on purchases of $50 or more. But most people end up spending more than they would have to reach the free shipping threshold, so the free shipping doesn’t end up “free” after all.

Grocery stores are notorious for using various marketing schemes to increase sales. They place certain items at eye level, put displays where they know you will walk by them, and offer sales such as “buy 10 for $10” when in fact you can get just one for $1.

Having special sales is one of the oldest tricks in the book for all retailers. When JC Penney went to everyday low pricing, sales for their stores slumped. Buyers always want to feel like they are saving money off the everyday price. But the problem with sales is they often make us think we are coming out ahead, when in reality we are spending money we never would have spent in the first place on items we likely don’t even need.

Then there are the various rewards programs. These programs create a false sense of obligation to shop at one store for your purchases, which may keep you from looking for better deals elsewhere. These companies are then able to track your purchases and cater their marketing campaigns towards your specific shopping trends.

Not all deals from merchants are bad. But make sure you arm yourself with some common sense: be sure to create a budget, shop from a list, and even shop with cash if that helps. Bottom line, make sure you are an educated consumer, and always think before letting the emotions of shopping get the better of you.

About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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