We all like to spend money on the things we need, as well as those guilty purchases on those we didn’t (I’m looking at you Air Fryer). However, do you ever get the feeling that you’ve been duped out of your hard-earned cash?
The truth is, it’s a consumer-driven world, and businesses will employ various selling tactics in retail to entice customers and encourage them to spend more. In 2022 alone, the value of UK retail sales totalled £441 billion, with a third of consumer spending going through retail. That’s a huge amount, but the question is, how much of this total is driven by age-old retail tricks of the trade to make you spend more? And, would you be able to spot the tricks retailers use both in store and online?
To help, we’re going to shed light on some of the most common tricks retailers use to increase their sales, offering you tips on how you can resist these temptations, allowing you to stay on track with your financial goals. Some you may be aware of, whilst others are so subtle, they may surprise you…
The Illusion of Discounts
One of the most prevalent tactics retailers will employ is psychological pricing, which involves simply setting prices that end in 99p or 95p, creating the illusion of a lower price. For example, an item priced at £9.99 seems much cheaper than £10, even though the difference is merely one penny. This strategy has proven to be highly effective for decades in enticing consumers to purchase without much consideration, something probably all of us have fallen for at some point. Pricing psychology can be seen everywhere, and it can be difficult in the moment to tell between a product’s true value and its perceived value.
When it comes to discounted products, pricing tactics used by retailers include sneakily setting higher initial prices to create the illusion of a larger discount too. We all want to avoid falling into the trap of getting lured by these ‘fantastic’ bargains, however, you can’t help but think “Wow, it’s only 99p!”
Discounts can evoke a sense of urgency, pushing us towards impulsive purchases that, unfortunately, we may later regret.
Financial Wellness Top Tip: Be mindful of psychological pricing tactics. Always round up to the next whole number to see the actual cost and decide whether the product is worth your hard-earned money. If you can resist impulsive buying, not only will this help you save money, but it will also contribute to your overall financial wellbeing.
Limited Time Offers – The Fear of Missing Out (FOMO)
We’ve all been in this scenario, walking by a shop before spotting a brightly coloured sales sign in the window. “For a limited time…”, “24 Hours Only…”, “Limited stock remaining…”
Retailers often create a sense of urgency through the use of limited time offers or flash sales with this wording. Advertising that a deal will only last for a short period creates a fear of missing out (FOMO) among consumers. This ‘fear’ compels us to make impulsive purchases, the worry that the deal is too good to ignore, and you have to act now before it’s gone!
52% of retail business owners in the UK run in-store promotions between 1 – 5 times a year, exploiting FOMO often. Being aware of this and avoiding making hasty purchases driven by FOMO is key, but this can be easier said than done. The scarcity principle is one of the most common retail sales tactics used by big brands, with the idea that limited availability increases the perceived value of a product. Using phrases like “limited stock” or “one-time offer” creates a sense of urgency, compelling us to act quickly.
Resisting this urge to buy when faced with limited time offers isn’t easy – mainly as everyone loves a discount!
Financial Wellness Top Tip: Practice restraint when confronted with any time-sensitive offers. Take a moment to think about whether you need the product or service and if it’s within your budget. Any true, actual bargains will more than likely appear again, so don’t worry about missing out this time.
Clever Product Placement & Store Layouts
Next time you step foot into a shop or supermarket, pay close attention to product placement. Have you ever wondered why some items that should be close to each other are actually much further apart, or why certain items are placed higher on the shelves than others? This is all by design…
Retailers strategically position high-margin and popular items at eye level or even near the checkout, where they are more likely to catch your attention. They may even put certain items on the ends of aisles or high-traffic areas of the store where they know they will be seen. This technique is great for retailers but painful on the wallet of impulse buyers. As we are all more inclined to pick up items that are conveniently placed right in front of us at eye level, you can see why shops position the items that they want to sell more of in these strategic positions.
Store layouts are all about the customer experience and to help encourage spending. Studies have shown that certain store layouts can influence consumer buying behaviour and lead to increased time spent inside a store, increasing the likelihood of making unplanned purchases. These psychological tricks retailers use to guide us through a store, showing us eye-catching displays and strategic product placement along the way to capture our attention and entice us to buy. From vibrant colours to aesthetically pleasing product arrangements, every detail is carefully designed to encourage impulse buying – and it works!
Retailers sometimes sell certain items at a loss or minimal profit, known as loss leaders. The purpose of this tactic is to attract customers into the store in the hope that they will also purchase higher-margin products during their visit. These items are often heavily advertised and can create a considerable draw for shoppers.
With all this in mind, shoppers need to have a plan and stick to it. Resisting the temptation to buy items solely because they are prominently displayed is easier said than done, but your bank balance will thank you later.
Financial Wellness Top Tip: Create a shopping list and stick to it. Avoid distractions caused by clever product placement, as those unplanned purchases can quickly add up and derail your budget. Stay focused on your intended purchases and avoid falling into the trap of buying additional items just because they are on sale.
Persuasive Packaging and Product Design
As many of us ‘buy with our eyes’, retailers know exactly how to package their products to catch our attention, helping persuade us to make a purchase. Sensory marketing is big business and another trick retailers use to help their products stand out on the shelves. Using vibrant colours and creative designs, such as innovative packaging shapes, every element is strategically designed to evoke our interest and curiosity – who hasn’t bought something based on the packaging or design, such as something that seems more ‘premium’, or even more ‘environmentally friendly’ than a similar item?
By understanding retail sales tactics relating to packaging, you can focus on the actual contents inside and the value of the product, rather than being swayed just because of its appearance.
‘Sensory marketing’ aims to create an emotional connection between consumers and products. Anything from the way the product feels in your hands, to the scent of the product, as well as how a shop may use soft background music, and tactile displays to help create positive associations with a brand. If we are emotionally engaged with a product or service, we are more likely to feel compelled to buy them.
As a shopper, ideally, you need to look beyond the surface appeal and assess the true value of a product or service, otherwise, you could be driven to make impulsive purchases driven by persuasive packaging. You don’t want to be later thinking “Why did I buy this again?”
Financial Wellness Top Tip: Try the 24-Hour rule to help avoid impulse buying. It simply involves waiting for at least 24 hours before making a non-essential purchase that you feel drawn to. You can then take the time to assess whether the product is something you really need, that it fits within your budget, and truly adds value. You may find that after 24 hours, the initial emotional impulse has gone, saving you some pennies to put towards something more essential.
The Power of Sales and Bundling
“Buy one, get one free!”, “Buy 3, Pay for 2” – we’ve all seen these everywhere we go, and the struggle is real to not take advantage. After all, who doesn’t want something for free? Sales and bundle deals have always been a consumer draw, and can always be guaranteed around holiday periods such as Easter, Christmas or even one of the many Bank Holiday weekends. 72% of retail business owners say Christmas is their biggest annual sales period, so enticing us with the promise of saving money and getting more for our purchases is a winner.
Similar to pricing psychology, these types of big sales and offers drive higher sales for retailers and create a sense of urgency among us, especially when we’ve got endless gifts to buy for the family!
However, while the initial price may seem tempting and too good to miss out on, do the bundled items genuinely provide value or will you end up spending much more on things you wouldn’t have bought otherwise? If say you only intended to buy 1 of something, such as your favourite biscuits (surely chocolate Hob-Nobs, other biscuits are available…), if these are on offer, then it’s difficult not to fall for the BOGOF or 3 for 2 promotions. The retailer has sneakily managed to persuade you to buy more in a single visit.
Financial Wellness Top Tip: Before raiding the sales or buying bundled deals, create a shopping list of essential items to stay focused on your needs and avoid impulsive purchases that could strain your budget.
Rewarding Consumers For Their Loyalty
Loyalty or reward programs are in many ways the perfect way to keep customers coming back for more. Offering perks such as exclusive discounts, cashback, or redeemable points for future purchases, retailers know they can encourage repeat business and ensure your loyalty with a good reward card scheme. It was estimated that 70% of UK adults were members of a loyalty scheme in 2020, with the average person a member of 4 loyalty programmes. That represents millions of people, and millions of pounds of spending, with 83% of consumers saying this influences their decision to buy again from a brand.
So, as we pursue the promise of rewards and exclusive benefits, is this really beneficial for you or more so for the retailer? Retailers design these schemes to create a sense of loyalty and commitment to them, enticing us to choose their products over their competitors. As part of common retail sales tactics, brands may introduce tiered membership levels into reward schemes and exclusive offers the more you spend. We all want special treatment, and this is how retailers make you spend more – helping you feel important and wanted.
If you look into the fine print of many reward programs, you may find it includes redemption restrictions, expiry dates, and point valuation so things may not be as simple as first thought. You may need to accumulate a lot of points before seeing true value or use them before a certain date or risk losing them altogether, helping to push more sales earlier.
Financial Wellness Tip: While reward programs can be beneficial when used well, avoid overspending simply to accumulate points or earn rewards. Only participate in programs that align with your spending habits and provide genuine value too.
Mindful Shopping & Your Financial Wellbeing
You may have heard of mindful shopping, and it is a powerful tool for protecting our financial wellbeing amidst an endless barrage of retail temptations. Resisting impulsive urges triggered by persuasive retail sales tactics and online retail tricks is not easy. Mindfulness allows us to pause, reflect, and assess whether a purchase supports our genuine needs and values. By taking a more mindful approach, you may just regain control over your spending habits, only making purchases that truly contribute to your happiness and financial goals.
Set Realistic Shopping Budgets and Financial Goals
If you set realistic shopping budgets and financial goals, your financial outlook can be much healthier. It will help you prioritise your spending and help you to focus on saving money. Maybe you would like to save more for emergencies, investments, or future aspirations such as owning a property. Setting financial goals will help you direct your money towards what truly matters rather than impulsive purchases or those influenced by pricing psychology or sensory marketing. This way, you can enjoy shopping while staying within responsible financial boundaries.
Make Better Choices for Long-Term Financial Wellbeing
Achieving long-term financial wellbeing requires focus and making consistent, informed choices. We all want to be able to make better decisions that support our financial health, but it is easier said than done for many of us.
If you start by keeping your long-term financial wellbeing in mind, you can approach shopping with a sense of purpose and intention. This will help you to avoid the pitfalls and retail tricks that make you spend more.
- Research before buying – Conduct thorough research before making significant purchases to ensure you are getting value for money.
- Avoid unnecessary debt – Only borrow money when it is truly essential and you can afford to do so, rather than for unessential purchases or must-buy deals.
- Embrace a minimalist mindset – always choose quality over quantity in your purchases.
- Try the 24 Hour rule – by waiting before making non-essential purchases, this will give you time to assess if you really need it.
- Set financial goals and create a budget – this should align with your long-term plans and priorities.
- Avoid impulse buying – create shopping lists and stick to them! Think about what else could that money be used for.
- Track Your Spending – Make use of budgeting tools and apps to track your spending and ensure you stay on target.
- Regularly review your progress – it’s an ongoing process and you can adjust your spending habits accordingly to stay on track with your long-term financial wellbeing.
Now that you know some of the tricks retailers use to make you spend more, the hard part is keeping this in mind when out shopping or browsing online. You want to take control of your spending habits and make informed decisions that align with your financial goals, so, remember that everywhere you look there will be a brand looking to grab your attention – just make sure it’s something you need and stays within budget!
Smart shopping and mindful spending are key to a secure and healthy financial future. For further financial insights and more on keeping your financial wellbeing as your top priority, check out the QuidMarket blog. For more information to help with your finances, please visit Money Helper for impartial advice.