Earlier this year I did a Facebook Live on the sales mentality. I discussed why things go on sale and how to stop wasting money on things you don’t need. Since it’s holiday season, I thought it’s a great time to reintroduce this topic and share my tips on how to avoid a sales mentality and shop smarter this holiday season.
It may seem counterintuitive for a personal stylist to speak about having a sales mentality because people hire me to shop for them. However, because I’ve spent years studying consumer purchasing habits both in the corporate world and in my personal styling business, I’ve learned a lot about WHY people shop and why things go on sale.
WHY DO THINGS GO ON SALE
Before becoming an entrepreneur, I worked in corporate merchandising and buying for retailers such as DKNY, J.Crew, Liz Claiborne and Donna Karan. My job was to select the merchandise that would go onto the sale floor or sell online. I selected the style, colors, price, and eventually whether the item would go on sale and what that sales price should be.
I had to determine the price point that a consumer would buy my item and ensure that it would make enough margin (basically sales – cost) to ensure profitability for my department. Having that much responsibility meant I would need to apply several tools to determine pricing.
And determine when an item should be put on sale.
Although there are several reasons why an item goes on sale, the # 1 reason is to clear through the inventory of that item. A particular shirt may not sell for a number of reasons (price, fit, quality, design), but the goal is to ensure that it sells at the highest price possible to make money. Since new items are always entering the store or online, the future product is mixed in. The longer it sits there without getting sold the less money the company can make from that style. My accountant friends call this amortization.
There is only so much physical space in a store, so the product must be physically removed in order for new product to replace it. Online stores have more space, but consumers tend to buy the items they see on the first few pages.
THE BIG SECRET ABOUT PRICING
Pricing is aligned with the demographics of the target client. Big box stores such as Walmart, Target and Kohls have a certain target customer, and they know there is a certain limit on what they will be willing to pay. Walmart’s customers are very price sensitive and are most interested in getting value, they want to maximize their hard-earned dollars. Target customers typically are willing to pay slightly more than Walmart, and their concern is not just good value, but also that the item is on trend and stylish. Kohl’s customers want style, but they’re not interested in paying full price and prefer cash towards future purchase (the famous Kohl’s’ cash).
Each of these companies are aware of their customer purchasing habits and create buying and selling strategies accordingly. They plan their sales strategies up to a year ahead of time knowing the price an item will actually sell for.
HOW THIS WORKS: SHIRT EXAMPLE
Let’s suppose a shirt is $49.99 and you find out the store is running a 30% off promo at the new price of $35. Now a shirt you might not have been that interested in becomes more appealing because it’s on sale. Similar to the high we get from eating too much sugar, shopping also gives us a rush of endorphins causing us to feel better because we got a deal.
But here’s the secret you may not know, in most cases the retailer was planning on selling you that shirt at $35 all along. Some people will buy at the original price, but they know they can turn on the promotion to clear the inventory. Certain retailers give you coupons or “cash” that you can redeem at a later time. When you come back at the future date, most of the store is typically not on sale so you end up spending more money. The possibility of future savings is so appealing you end up buying more than you anticipated to get the “cash”.
Moral of the story, you can still buy items on sale, but be more savvy about your purchases. Try to avoid buying something to fulfill an emotional need. If you follow a sales mentality where you only purchase clothes when they are on sale, you will lose out on something that was so great, it didn’t need to go on sale. And oftentimes even the savviest coupon code, points collecting gurus end up with items they don’t need or excess amounts that they are giving away to people. Remember that show Extreme Couponing.
Next Time You SHOP, ask yourself the following questions:
- Why am I buying this?
- Is it something I need or is it something I want?
- Am I buying it only because it’s on sale?
- Am I buying this to make myself better?
If you decide to go ahead and purchase the sale item then once you get home or it arrives at your house. Do the following to avoid buyer’s remorse:
- Try it on and look at yourself in the mirror. Does the item fit correctly? Does it flatter your shape?
- Make 3 outfits with this item to make sure it deserves a spot in your closet.
We only wear 20% of our wardrobes and the rest is typically full of items that don’t fit or were on sale. Let’s reduce our carbon footprint, and try to purchase items we can truly appreciate.
Need help with your wardrobe? Setup a style strategy call with me to learn more.