News) 'Tis the season . . . for a SALE. Once a special occasion,
storewide markdowns are becoming commonplace, and savvy shoppers know
just when to pounce. Our Cover Story is reported by Mark Strassmann:
Friday, retail's Super Bowl of super sales, has become an everyday
mindset. In the great shopping bazaar of America, everything better be
we're buying, we're shopping for deals.
"You're an idiot if you pay full price for anything,
ever," said journalist Mark Ellwood, "because everything goes on
Ellwood is kidding about the word idiot, sort of. But
the author of "Bargain Fever" is serious about helping shoppers find
"Ten years ago,
retailers sold between 15 and 20 percent of their inventory at some form of
promotion," Ellwood said. "Now they sell between 40 and 45 percent, and
that number is rising. We are heading to a situation where a sale is more
normal than a full price."
Shoppers used to be happy with sales of 10 or 20 percent
off. No more. Shoppers' eyes light up when they see 50 percent, or more.
lights up is your brain.
"We're chemically programmed to respond to sales,"
said Ellwood. "There are hormones in our brain that activate when you
see a sale. The chemical that triggers that reaction is one
of the biggest chemical rewards we have. The more you make someone feel
about a sale, the more they'll come back."
So merchants are trying to trigger a dopamine response? "Exactly," Ellwood said.
In New York City -- a shopper's Shangri-La -- Shelly and Renee
are the real deal. Their private, super-high-end sample sales are
legendary, bringing in designer merchandise at "super discounted prices,"
such as Vera Wang's wedding dress event (Hurry! Tomorrow!).
Respectable socialites have elbowed each other aside for
a $6,000 handbag at 70 percent off.
"These folks can afford to pay full price, so why?"
Renee replied, "It's a high, it's a rush. It's a
great thing. You got a great deal."
"So even the wealthiest people in New York want the
Shelly said her customers feel it's very important they
be the first to get the best deal possible.
"So they can tell their friends?" Strasmann
"No, no, no, no!" Shelly and Renee both replied."That's a little
secret for them. It's their secret pleasure."
And the next shopping secret is as close as your
laptop. Finding online bargains is such a way of life, this year's Cyber Monday
after Thanksgiving was the biggest single online shopping day ever, with more
than $2 billion spent.
"Instead of competing with the store down the
street, you're competing with every single store on the Internet," said Izzy
Grinspan, editorial director of shopping website racked.com. "And you're competing with Amazon, with these
"There's a phenomenon known as 'showrooming,' where
you'll go into a brick and mortar store, you'll see an item you like, and then
you're treating the store like a showroom. You look on your phone and you try
to find a better deal."
The art of the deal in modern retailing began during the Industrial
Revolution in Europe.
"There were no price
tags," said Ellwood. "You didn't need them -- you haggled. But as we all
know, the middle class is a little ashamed of not seeming rich enough. And just
as the middle class was being smelted in all the Industrial Revolution in
Europe, a very smart shopkeeper in Paris thought, 'Oh, I know how to take
advantage of this.'"
That Frenchmen, Aristide Boucicaut, created fixed
pricing in the 1860s at Le Bon Marche, the world-famous department store. Once his price tag was born, it was destined
to be slashed.
Customers longed for deals, and the coupon (Coca-Cola's
brainchild in 1886) helped slash those prices. By the 1970s, 75 percent of Americans
were clipping away -- and bargain-hunting at new chains like Wal-Mart, K-Mart and
"People feel good when getting discounts 'cause it's
great to know you got a good deal," said Kevin Bryant, a district team
leader with Target. Bryant says, these days, customers drive down prices
only with coupons but phone apps, online shopping and rewards cards.
"Our guests are more
savvy than ever, they're more educated than ever," he said.
Target woos them with an image of cool products
at low prices.
"For the millennials
or a mom at home with kids wants to feel hip, wants to feel trendy, but
wants it at a reasonable price," he said.
Barbara Burns is one of those stay-at-home
moms that target Targets -- and she doesn't mind calling herself
asked, "When was the last time you paid full price for
"I don't know!" she laughed. "I'm honestly
trying to think ..."
The Atlanta wife and mother of two bargain-hunts
relentlessly, in stores and online. She'll buy gifts for ten people this Christmas.
budget is $300.
What would be the value of the gifts that she gives? "Maybe three
times that, so about $900," Burns said.
She happily haggles. She did when she bought her refrigerator
-- knocking the price down another $400. And, she said, she feels better about her fridge every time
she opens it
It may make you feel better, but what's the real deal?
Ellwood says retailers get our dopamine surging with artificial discounts.
He said the typical markup on a product might
be as big as 70 percent: "It's astonishing to realize that if something
costs a hundred bucks, it could have cost $30 as a raw cost," Ellwood said.
"But that $70 is both to build in huge amounts of marketing costs and also
to build in that anticipated discount. Remember, markups are now there to allow
stores to offer you a promotion."
And any way you turn, chances are you will see
"Red is the first color to hit our eyeballs. It's
the shortest wavelength, so it literally hits us first," said Ellwood. "It
grabs our attention. As the population ages, there's a sort of yellow sheen to the
world, the color that will be easiest to discern is red. So with an aging
population, there'll be more and more red, because it genuinely is the color
that our eyes find easiest to see."
J.C. Penney is STILL seeing red after it tried
eliminating discounts last year, offering instead what it called set "fair
and square prices." Shoppers revolted. The pricing experiment cost the chain $1 billion last year.
"People don't want 'fair prices,'" said Ellwood. "They
want to feel like they've gotten one over on the store."
But there are exceptions. Forget about getting anything over on Louis Vuitton,
the luxury French fashion company. It's one of the only major brands that never
Anywhere else, though, and Ellwood believes every day
should be Black Friday:
"When you're paying full price, you're letting
yourself down, because it's really easy to get a sale," he said. "And
it's also really fun. You didn't know it was dopamine surging through your
brain. But you still come out of the store, and you're grinning, and you're
thinking, 'That was amazing.' We should have that moment all the time."