People shop in bulk to save money, but low prices aren't the only way the stores entice shoppers to spend. Costco makes most of its money from annual membership fees, which help it maintain low prices. Feeling that they're getting good deals as soon as you walk in the door encourages people to buy more than they need, says psychotherapist Judy Belmont.
"It’s unbelievable how low some of those prices are," Belmont says. "So people end up spending a lot more."
This never occurred to me until behavioral and marketing psychologist Elliott Jaffa pointed it out to me: There’s no music playing in the background while shopping. "They want you in that store forever," Jaffa says. There’s no fast music to make you shop faster or slow music to encourage you to meander through the store."
Large sizes that look like deals
If bigger is better, then buying more of something bigger is that much more of a savings, or at least a perception of savings. The sizes and quantities of products are not what people are used to, Jaffa says, so a four-pack of 32-ounce bottles of ketchup looks like a deal worth buying. Never mind that you may never use all of that ketchup before it goes bad. You have to look at the unit prices — sometimes marked, sometimes not — and compare it to other stores' unit prices to figure out if you are truly getting a good deal.
"I’ve got to believe they (Costco) have some of the best psychologists in the country who work for them," he says, "because they have the best suppliers and know how to price it."
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