Over the past several months I have been posting content to my Facebook page to help folks save money in this rough economy. The Smart Money section of the Wall Street Journal is great for this. This past Saturday, however, I posted a link to a story about JC Penney and their recent efforts to distinguish themselves in the retail space. One of the moves they made was to eliminate the "$19.95 pricing" key in retail for as long as anyone can remember. Now, that item is just $20.
Interestingly, in addition to the psychological reason of making people think the item is less expensive, the practice actually started in the 1800s in order to force sales assistants to ring up the purchase on a cash register to give change to the customer and reduce the temptation for them to pocket the note. However, I still think that the psychological reason is the one that has had this practice continue through the ages.
I was shopping with my wife this past weekend, and she wanted to go shoe shopping at the local DSW store. While she was looking for sandals (or as she calls them, "thong shoes," since she's from the midwest), I was looking at casual shoes to replace my old Docksiders. I found a nice shoe on sale, and the sign gave the price as $59.95, while the "regular" price was $65.
It took me a few minutes to realize it, but I was being snookered by the store from two different directions. The "regular" price was rounded up to the next dollar, while the sales price was still the old school numbers. In effect, the sale price was only $5 less than the regular one, a mere 8% savings. Considering retail markup on goods, this wasn't much, especially for a store that promotes itself as being so inexpensive.
The thing to keep in mind here is that retailers are shrewd, and saving money means paying attention. Read the ads carefully to see what the real deal is and how it stacks up to the competitors. If you do, and enough people join them, maybe retailers will stop these shenanigans. I know I walked out of the story without buying them because I realized I wasn't getting that great a deal. Perhaps you should too.