Americans have a long-standing love affair with bargains. Look no further than the warehouse clubs, discount stores and outlet malls that carpet the country.
But in a persuasive new book, "Cheap: The High Cost of Discount Culture," Ellen Ruppel Shell, a correspondent for The Atlantic, describes the web of marketing and manipulation that discount retailers use to drain cash from your wallet.
Outlet malls are among the worst offenders, Shell says, with their glittering promises of "the very best quality, at the very lowest prices."
Ironically, she asserts, they offer neither: Outlet malls are like fun houses that play on shoppers' distorted perceptions of luxury, value and price.
"People are not questioning the quality at these designer outlets; they're not questioning the 'low prices,' so it's a bonanza for retailers," Shell said in a recent interview.
To truly get your money's worth, it pays to learn more about the outlet game.
20% off? I'll take it!
You don't have to tell me about the perils of outlet malls. I live about an hour and a half from one of the biggest: the famed Woodbury Common, home to 220 "premium" outlet stores.On my first trip there, about 10 years ago, I was single and shopping under the influence of the "Sex and the City" culture. I loved it.
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Where were the designer deals? The steals that made you gasp and race to the cash register? Every price seemed steep, from the Coach bags to the DKNY coats to the $60 Banana Republic jeans that I bullied my husband into buying.
"I've never spent $60 on jeans in my life," he said, fuming.
"Well, they look great on you, and they're marked down from $75. And, for Pete's sake, we've come all this way," I argued back.
Little did I know, I was just another sucker who had fallen for some classic tricks from the outlet mall handbook.
The outlet trap
What makes people shop? Economists, marketers and psychologists have written volumes on this topic, and outlet malls have used that knowledge for their own gain. Shell says the outlet allure is based on two key factors:1. Location. You might assume that outlet malls are situated far from urban centers because they need the space. But that inconvenience is also designed to create in shoppers' minds what economists call the "sunk cost fallacy."
The 55 million people shopping at outlet malls each year, Shell says, drive a total distance that "equals 440,000 circumnavigations of the globe."
The extra time and resources sunk into the trip encourage a ready-to-spend mind-set even before your car is parked. "Psychologically, all this (effort) must be repaid in terms of purchases made," Shell writes.
That's how "Well, we drove all this way" turns into "Maybe I need a new toaster oven after all."
2. Value confusion. Not so long ago, factory outlet stores primarily sold the real McCoy, Shell says: off-season or slightly damaged -- but still genuine -- designer merchandise at reduced prices.
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Today, the merchandise at most outlet mall stores is a mix of actual designer items and products created specifically for outlet stores and outlet shoppers. The system is deceptive because it preys upon people's inability to identify the true quality that marks a designer item.
Thus outlet shoppers put their faith in items that carry a certain luxury brand name, without understanding whether the items in hand are worth the money they're paying.
This value confusion sets the stage for how outlet malls snare your business.
Seductive marketing
People are so seduced by the words "sale" and "discount," according to a study detailed in "Cheap," that they will buy an item that's "on sale" even when they know that the same thing is selling for less elsewhere.
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It's not the asking price that gets us to spend, researchers believe, but the amount "saved."
MRIs of shoppers' brains have shown that spending triggers discomfort. Discounting helps alleviate that, Shell says, "so we associate more with the money we saved than the money we spent."
Outlet malls exploit shoppers' discount cravings by setting artificially high reference prices, then marking them down. At one jewelry store, for example, Shell examined a necklace with an asking price of more than $3,000 and a discount price of $800. Its actual value: about $300.
Few of the "original" prices you see in outlet stores are real, Shell says. The sleight of hand is designed to create a discount illusion so powerful that it drives you to buy.
What you're buying is yet another issue.
Continued: Is what you bought what you thought?
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