Is this tactic on the money?
Shopping in sales appears to make good financial sense but beware of the way a cheap price may change buying behaviour. Shoppers can end up buying more of an item than they want - or could be tempted in to buying something they don't really need.
If an item is on sale, should I buy it?
At times sales do pay off for consumers and shoppers buy exactly what they want at a cheaper price. But one thing you can be sure of is shopkeepers would not sell a product more cheaply than usual if they didn't need to. It may be that a store has stock that it cannot shift, so discounts it, or that prices are forced down by a competitor. Clothing retailers sometimes need to move stock going out of fashion.
At times the objective of sales is simply to get shoppers through the door. The owner knows once customers are inside the store, they will likely buy not only the item on sale but also pick up items that are not on sale - possibly pushing up the total spend.
Why we should shop around
As far back as 1981, academics at Princeton University in the United States were asking why stores have sales. One conclusion was that shopkeepers could make an item appear to be a good deal if they put it on sale. But the catch, the authors wrote, was that it was likely shoppers would not have enough information to know if the item was a good deal. Shopping around was costly in time and, possibly, money.
Today, with the internet and price comparison sites, searches are easier and probably cost less. Nevertheless, there could still be a better bargain around the corner.
Research in 2004 based on actual price data gathered in Chicago found the amount of storage space in homes affects the prices shops can charge for products. If it is costly to store an item, people tend to buy only as much as they need.
Researchers David Bell and Christian Hilber found that people with similar incomes living in small housing units make more shopping trips than those in larger houses. The smaller housing units tended to be in the cities and the larger houses were further out. The paper said shops in the cities tended to have fewer sales promotions than those in the outer areas. The retailers in the city areas know that people will shop more often so they do not need to encourage them by lowering their prices.
What can I do to ensure I really get a bargain next time I hit the sales?
Academic research suggests that there are at least three things that you can do to make sure you nab a bargain. First, compare prices. You may get a better price somewhere else. This is easy on the internet. Second, if possible, look at the prices in the suburbs, beyond the central city. Third, do not build too much storage space. You could only be tempted to fill it with things you may not need.