What's the Catch?: 40% Off Original Ticket Prices

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Feb 15, 2016
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Behavioral Finance, Question of the Day, Advertising, Purchase Decisions, Current Events, Article

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If you ever wondered whether those sale items were ever offered at the “original ticket prices” noted above, well…you might want to read this Buzzfeed article (good study in consumer behavior):

There are few things as thrilling as a 60% off sign, particularly when it’s hanging above something you actually want to buy. But the tactics stores use to give you that heady “I just got a bargain!” rush are under siege.

Chains from Kohl’s to Nordstrom Rack have been fighting a massive wave of class-action lawsuits in the past few years questioning just how legitimate their discounts really are. Since 2012, consumers have filed at least 35 suits, mostly in California, saying they were duped into buying goods they wouldn’t have otherwise purchased based on phony discounts, BuzzFeed News has found. And they want their money back.

The suits claim there’s a bait and switch going on: You walk into a store, see a jacket on sale for 40% off, and buy it based on what a great deal is it. But it turns out the jacket was never sold at that original price. In other cases, let’s say you walk into an off-pricer or outlet mall and see a purse for 30% off its original price. Later, you find out it was never sold anywhere else. Is that fair?

Here’s a recent Macy’s disclosure on a sale item:

Macy’s seems to be proceeding cautiously with a small “Pricing Policy” link on item pages, which opens a window that says: “‘Regular’ and ‘Original’ prices are offering prices that may not have resulted in actual sales, and some ‘Original’ prices may not have been in effect during the past 90 days.”

The article also described the proliferation of off-price chains, such as Nordstrom Rack, and some practices that might confuse consumers:

The lawsuit involving Nordstrom Rack reflects some confusion around what consumers are buying at the off-price version of Nordstrom. It’s notable for a few reasons. First, Rack has said that less than 20% of its merchandise comes from regular Nordstrom stores. Second, Rack stores also now way outnumber full-price Nordstrom locations. And third, Rack’s success has spawned a host of competitors including Macy’s Backstage and Find @ Lord & Taylor.

I guess the moral to the story: Caveat Emptor OR don’t buy based on the size of the discount, because it may all be a mirage!

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Check out this popular NGPF-curated video: Why are teenagers so brand conscious?

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.