7 ways warehouse clubs get you hooked
If you keep these tricks in mind, you may get out of the store without deviating from your well-planned shopping list.
This guest post comes from Aaron Crowe at dealnews.com.
Unless I leave my wallet at home, I can never leave Costco without spending $100. It's simply not possible. I may go there with a shopping list and be determined to stick to it, but every visit I leave with more than I expected to buy.
What pull does Costco have over my wallet? How do warehouse club retailers, or online bulk sellers like Amazon's Subscribe and Save, get shoppers to spend more than they planned? Here are a few factors that go into it. Make yourself aware of them, and maybe you'll avoid buying more than you need.
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Low prices.People shop in bulk to save money, but low prices offer another enticement to spend. Feeling that they're getting good deals as soon as they walk in the door encourages people to buy more than they need, says psychotherapist Judy Belmont.
"It’s unbelievable how low some of those prices are," Belmont says. "So people end up spending a lot more."
No music. This never occurred to me until behavioral and marketing psychologist Elliott Jaffa pointed it out: There's no music playing in the background. "They want you in that store forever," Jaffa says. There's no fast music to make you shop faster.
Large sizes that look like deals. If bigger is better, then buying more of something bigger is that much more of a savings, or at least a perception of savings. The sizes and quantities of products are not what people are used to, Jaffa says, so a four-pack of 32-ounce bottles of ketchup looks like a deal worth buying. Never mind that you may never use all of that ketchup before it goes bad. You have to look at the unit prices -- sometimes marked, sometimes not -- and compare them with other stores' unit prices to figure out if you are truly getting a good deal.
"I've got to believe they (Costco) have some of the best psychologists in the country who work for them," he says, "because they have the best suppliers and know how to price it."
Product placement. Whether it's a warehouse club or a grocery store, product placement is key to getting shoppers to buy, says Rob Jager, a business and management consultant who has worked for numerous big-box retailers. Cameras, computers and other tech equipment don't provide a large profit margin for such stores, which put those items at the front of the store so they get a lot of turnover.
The ends of aisles, or "end caps" as they're known, are prominent spots that suppliers often pay for. Signage may make you think the end cap products are great deals, but check twice before grabbing the product. "I think shoppers have been trained to believe that's where the deals are," he says. But it might just be that that's where the ad dollars are going.
A treasure hunt. Since stores like Costco change their merchandise often, you never know if what you see on sale today will be there the next day if you decide to go home and think the potential purchase over. Finding new things in a warehouse club is a treasure hunt and gives shoppers a sense of intrigue when they walk in.
Marketing expert Harry Beckwith, who has Costco as a client, says his best friend can't go to Costco without telling him about the three incredible deals he got there. This friend is wealthy but shops at Costco because it makes him feel clever and smart. It turns shopping -- something he normally dislikes -- into a game he loves.
Survival of the fittest. Face it: Walking through a huge store can be a hassle. The parking lot is usually crammed, the store is full of people pushing huge shopping carts that are difficult to maneuver, and checkout lines are long. It's not an easy trip, so once there, you might as well make the best of it and buy as much as you can so that you don't have to do another trip soon.
Customized deals. Sam's Club, for one, gets members to buy more by tracking prior purchasing patterns and then offering customized deals, says Bruce D. Sanders, a consumer psychologist and retailing consultant. The Sam's Club eValues program, which requires an extra annual fee, uses predictive analytics to determine which items would be attractive specifically to you, and then offers you discounts on those items. This includes items you've never tried before but the computer figures you'll probably get in the habit of buying, he said.
Sam's Club is creating what consumer psychologists call the "endowment effect" by encouraging shoppers to buy more because they've paid for the ability to get rewards and are motivated to use the privileges, Sanders said.
More from dealnews.com and MSN Money:
I have been a member of Sam's Club since it was know as Pace years and years ago. Back, then you really could get deals shopping at Pace. I have noticed over the past few years that Sam's Club has seem to have gone to the model that every product must be at least $5-6 and up to make it worth their time. In addition, many products are now more expensive then getting them in a grocery store (defies logic - pay a membership fee, buy in bulk and pay more)!
I tell my wife all the time that the day they put a Costco with 15-20 minutes of us (outside of Hartford CT) we are dropping our membership to Sam's and joining Costco, since they seem to have better prices.
Costco's research indicates that a member spends $100 for every ten minutes "spent" in the store. That is why when you search for a specific item .... it has been moved. Your effort trying to locate that item introduces you to many more items, much more time "spent" in the store, thus much more $$ spent trying to find that specific item. How many times have you gone in for one item and come out with one item? I mean the item you actually went in for, not the new item you left with. Also, empty buggies are located strategically throughout the store which forces you to go a different direction, thus more $$. It's not rocket science. Their purpose is to sell as many big ticket items as possible. That is where the money is. Have you noticed the movies are now located more in the center of the section, rather than the end isle? Everyone shops for movies on their way out - to exit this area you need to exit through the snack isles (Disney mentality - leave each ride through a gift shop; Costco snack, pizza, soda, ice cream, hot dogs). Just make your list, go directly to the back of the store to get items on the list, move towards the check-out AND check-out immediately. This, believe it or not, can be achieved in under ten minutes. We wait for movies until their under $10 as a rule so there is no need to check their movie section. We buy books directly through Scholastic or their affiliates, no need to check the books. We do, however, purchase mens shirts at Costco ... but it must be on the list beforehand or it's a no go. Our budget is $200 a month for gas/groceries. We buy fresh produce and cook our meals from scratch; we fill the tank twice a month at Costco. We use the reimbursement at the end of our annual membership to repurchase our membership and use the extra (in the form of cash) for our family birthday presents and stock (including Costco stock). We use all the money saved from shopping sensibly at Costco towards vacations, skiing, replacement vehicles, etc. Costco has been a lifesaver for our family not only with their excellent prices on food, but also their insurance offers through Ameriprise.
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