Today’s retail environment is fiercely competitive.
While a number of stores face the risk of insolvency, they also contend with agile, internet-first rivals nearly every day.
That translates into intense pressure to keep prices low and promotions frequent. That is, until buyers wise up.
Consumers’ Checkbook, a nonprofit publisher operating in seven metropolitan areas, dispatched a four-person team to perform weekly price audits on over 350 products across 19 large retailers over a 10-month period. The investigators uncovered “alarming” pricing tactics at 17 of the 19 stores reviewed.
“Many sale prices — even those that tout substantial savings — are phony discounts, with the identical price labeled a sale price more than half the time,” the report, overseen by executive editor Kevin Brasler, declared. “For several chains Checkbook found most items we monitored were listed at a false discount every week, or nearly every week we checked.”
Checkbook identified “generally misleading” promotions at JCPenney (use coupons to save), Kmart, Kohl’s, Macy’s, Neiman Marcus and Sears, which displayed sale tags more than three-quarters of the time.
“At Neiman Marcus and Sears, 10 of the items we tracked at each retailer were on sale every time we checked over 10 checks,” the report observed.
Combine the habits of the 17 offending retailers and you get items advertised as “on sale” 57% of the time, “meaning that more often than not they promoted prices as discounts that weren’t truly special,” the report clarified.
The only two retailers that passed the deceptive-pricing check were Costco and Bed Bath & Beyond, both of which “regularly ran bona fide sales.”
The organization found comparable outcomes in a similar study it ran in 2014 and 2015, though that earlier effort was smaller and covered fewer merchants.
“This tactic of perpetual sales is considerably more widespread than it was three or four years ago,” Brasler told us by phone.
He noted that appliances, mattresses, and rugs and carpets are long-standing offenders for being perpetually marked down.
Sales Strategy: Crafty Stores vs. Cautious Consumers
Consumers’ Checkbook asserts that the habit of constantly posting sale prices misleads shoppers.
“If something is listed at a 60% markdown, why bother comparing prices elsewhere?” Brasler’s summary of the findings asks.
Savinly highlighted this misleading-pricing effect during its yearly review of Black Friday circulars. When major retailers’ ads were checked against manufacturers’ suggested prices for big-ticket items, we found relatively few truly exceptional bargains.
Eric Jones, co-owner of deal site Best Black Friday, said apparel, small kitchen appliances and household goods are frequently discounted partly because consumers continually repurchase them for everyday use.
“Those especially attractive discounts lure you in, and retailers hope you’ll pick up some hand towels or a T-shirt” or another item that offsets the profit they lost on the featured sale item, Jones said.
His site has compared which stores repeat the same promotions each Black Friday (Answer: nearly all of them). But the Black Friday label is now appearing at other times of year as well, from Spring Black Friday at home-and-garden outlets to Prime Day inserted into mid-summer.
Repeated promotions fool consumers into believing excellent deals are available constantly, Jones added.
“You can’t have a great deal every single time,” he said. “That’s not a sale price, that’s simply the ordinary price.”
Jones’ best advice for spotting true bargains: Compare a retailer’s price with Amazon. If the price is comparable or lower there, it’s likely a legitimate bargain.
“It’s obvious retailers realize they can’t win on price against online competitors,” Brasler said. “It’s not only Amazon — there are many rivals. They can’t match prices so they manufacture the appearance of low prices.”
And the tactic is effective.
Brasler noted that major retailers now possess more data than ever to demonstrate that perpetual promotions attract customers — at least for the moment.
“Everyone is culpable as a shopper,” Brasler said about falling for these strategies. “Everyone wants to believe they scored a deal, that they can afford to buy more.”
Lisa Hart is a senior writer at Savinly.
