Sunday, November 21, 2010

Five Simple Tips to Help You Make Good Shopping Decisions

'Tis the season! But you may have noticed that it often feels like it's no longer the holiday season, it's the shopping season. In a year of record high unemployment, with massive numbers of home foreclosures, and utter financial disaster affecting a huge number of people, we're still being urged to shop until we drop. Of course, not everyone is buying it.

In the past, I've posted several alternative views about how to handle shopping during the holidays, including observing Buy Nothing Day rather than Black Friday; considering the words of Reverend Billy of The Church of Stop Shopping; and celebrating Discardia, the holiday created by Dinah Sanders who wants us to find the joy in letting go of stuff rather than acquiring more. But the reality is that most of us will be searching for a gift or two, so we might as well be as prepared as we can be when we face shopping.

I'm an advocate of buying consumable gifts rather than stuff: food, tickets to events, memberships to museums, etc. These gifts also offer the advantage of shopping online. But if you're going to buy something that your recipient will have around the house for awhile, I'm also an advocate of shopping at local small businesses who will appreciate your support. Whether you intend to shop in your neighborhood or hit the mall or superstore, it's helpful at least to be aware of some of the factors that influence our decisions to buy.

Retail stores will do their best to engage all five of your senses to get you to make a purchase. They'll be sure to use flattering lighting; they'll play music in a familiar style that makes you comfortable, like you belong there, and the tempo will be slow enough that you'll be encouraged to linger; they'll make the store smell inviting, too, and maybe offer you free samples of cookies or other holiday goodies (eating stimulates the salivary glands and studies have shown that leads to spending); and if you touch something you're considering buying, you'll be more inclined to buy it (a "disadvantage," from the retailers point of view, that online shopping can't overcome; but an advantage for careful shoppers!).

Stores will also encourage impulse buying. We've all been tempted, and often succumbed to the urge to pick up a little something extra while standing in line at the cash register.
Retailers often identify potential 'impulse buys' and stock them at the ends of aisles and close to the checkout stand. Shoppers may not plan to make these sorts of purchases, but stores do plan to make these sorts of sales.
Adding a bonus item for "free" is a temptation few can resist.
The power of 'free' is really quite incredible," says Dan Ariely, professor of psychology and behavioral economics at Duke University in Durham, N.C., and author of Predictably Irrational. In a series of experiments described in his book, Ariely found that people consistently preferred to get something free over paying a little for something, even though they'd actually come out ahead in the latter case. For instance, he offered mall-goers in Boston the following choice: a $10 Amazon gift certificate free or a $20 certificate for $7. Most opted for the freebie, even though they would have netted more money from the $20 certificate ($13 versus $10). In a second experiment, he offered a slightly different choice: People could buy a $10 gift certificate for $1 or a $20 certificate for $8. Again, the $20 certificate was $3 more profitable, but this time — with "free" off the table — people went for it.

All prices are relative and our perception of value is affected by this. A less expensive item in a store full of luxury goods may look like a bargain, but the same price on the identical item in a department store could look excessive because we'll compare it to the average department store prices.
So, for example, a computer store can probably sell more $100 printers if it also has a $300 printer for sale than it could if the $100 printer were the most expensive one they carried.
This is the time of year that stores are most aggresive in offering discounts if you open a credit card account with them. But simply choosing to pay with any credit card can be deceiving.

Paying with a credit or debit card can almost seem like not paying at all. No actual money changes hands. There's no real evidence that you're any poorer than you were before. But when you pay with cash, money does change hands, and not in a pleasant direction. You end up with less than you had before. You're demonstrably poorer. It hurts. A number of studies have shown that shoppers are less prone to impulse buying if they leave the plastic at home and force themselves to endure the pain of paying with cash. Ideally, they should use bills of large denominations, according to a 2006 paper in the Journal of Consumer Research. "People are less likely to spend if they are carrying a $50 bill compared to when they have ten $5 bills," says Mishra, a co-author of that article.
Finally, there is evidence that the shopping experience is different for men and women. We really do still behave like hunters and gatherers:

"There's a shopping center in Germany with a play area for men," says Daniel Kruger, a professor in the School of Public Health at the University of Michigan in Ann Arbor. "A woman can drop off her partner there, and while she shops he can drink, work with power tools or watch sports on TV."
The point being, both of them are happier that way. "Men just want to get what they want and get out," says Kruger, the lead author of a 2009 study published in the Journal of Social, Evolutionary, and Cultural Psychology that documented fundamental differences in the shopping behaviors of men and women. "Women have a much greater appreciation of detail, a much greater desire to actually experience what they're getting. They want to see several items and compare them."

The researchers linked these differences all the way back to when the man of the cave went out hunting while his mate stayed home gathering nuts and berries — "which is very similar," Kruger observes, "to going to a flea market today and sorting through everything to see what's good."
So, assuming you've thought through exactly how much shopping you want to do, how can you plan ahead to be sure you make your best possible shopping decisions?

1. Set a budget.
2. Don't shop while you're hungry or tired.
3. Don't buy something just because you can get something extra with it for "free."
4. Pay with cash.
5. Remember that hunters and gatherers are happier shopping separately!

© 2010 Cynthia Friedlob
Image credit: Robert Proksa at stock.xchng