70% off Sale versus 50% off and then another 20% off Sale
In early August, ’10, I visited a few stores at the Prime Outlet Mall in Kenosha, Wisconsin, to do some back to school shopping with my children. One store mentioned they were having a 70% sale. That sign certainly caught my attention. I thought, how can they actually discount items by 70%? Actually, it was a 50% off the suggested retail price and then an additional 20% off. Therefore, 50% and 20% off equals 70%, right?
Wrong. Interestingly, 70% off retail is somewhat different from 50% off and then 20% off. For example, if you’re shopping for a $100 pair of shoes, 70% off means a $100 pair of shoes will cost $30 plus tax. If the same pair of shoes is discounted 50% off ($50) and then 20% off ($10), the total price would be $40 plus tax as the discount would be $60 ($50 +$10). Therefore, the price differential between the two scenarios is $10. It’s not a significant deal but something astute shoppers would notice. What if you’re dealing with $1000 or $2000 item? Knowing the game could save you few hundred dollars. Is this common knowledge among shoppers in terms of how percentages are applied to retail items?
50% off Sale means what?
At the Bass store at the Prime Outlet Mall, all things are on sale, which is very encouraging. BTW, I’ve never walked into a store where they were not having some sort of sale—it’s a marketing approach.
Their shoes are priced between $109 and $129, which is much more than I’d pay for a pair of shoes but wait, they are on sale. All shoes are 50% off. Even at 50% off, a pair of shoes retailing for $129 would still cost around $65. More reasonable than over $100 but still a little high, especially at an outlet store. If that particular item is further discounted another 20%, that pair of shoes becomes $52. At that price point, I have more interest if I find the right color, quality and style.
Shoes are not the only items in Bass which appear to be marked up, enabling the store to make a good profit even if they offer a significant discount. Shorts and pants fall into this category. All casual summer shorts retail between $40 and $50 so the 50% discount on shorts may still cost you $20 to $25. Again, this is a little more than I want to pay for shorts, especially at a Wisconsin outlet store in August. Pants generally retail for $56, so the average discount still means casual men’s pants would cost around $28. Again, an Ok price but a bit pricey for an outlet mall. Again, regardless of the original price or fantastic sale advertised, what will be the actual out of pocket expense? Moreover, is this something you really need?
Pricing Approach Duplicated at other Stores
This pricing approach is common among a certain amount of shoes and clothing stores at the Prime Outlets. The customers think they’re getting a good deal because items are 50% off or greater. Retailers (paying less in overhead in rural Kenosha County) are making some pretty respectable profits even at this steep discount because of the original retail price of $56 for a pair of casual pants and $129 for a pair of dress shoes. Regardless of the discount or original price, be an astute shopper. Don’t get caught up in the percent of saving. Don’t get caught up on the original retail price, put those amounts to the side. Look to see if what you’re buying is something you need and a good value. Focus on what exactly you’ll be paying for the item regardless of the shopping experience.