Shopping Without a Payday Loan is the New Black

Holiday and post-holiday sales have offered such deep discounts that shoppers didn’t even have to think about getting a payday loan to afford designer jeans and high-end shoes. Consumers have gotten used to seeing “75 percent off” signs, and some retailers fear there will be no going back.

Adding to the perception that shoppers will always find discounts of 70 percent or more: liquidation sales. After the worst holiday shopping season in years, many retailers are closing up shop. That means they are selling their merchandise for next to nothing while those merchants lucky enough to still be in business are putting their new spring products on the shelves.

Economics of expectation

After weeks of being able to find products at deep discounts, shoppers are used to it. Furthermore, they expect it. Other factors contribute to this demand for super-low prices. For one, with a shrinking economy and unemployment on the rise, many consumers simply can’t afford regular prices.

Another factor is perception regarding the value of merchandise. After being able to acquire goods at a fraction of the original price, people are questioning the value of these items. Shoppers figure if a retailer sold a $200 pair of jeans for $50, then those jeans must really only be worth $50.

70 is the new 50

Retailers used to be able to attract customers by offering 40 to 50 percent off. Now shoppers are saying that’s not enough. A professor of marketing at the Golden Gate University’s Ageno School of Business says the perception of what is a good deal has changed. She says a sale has to be at least 70 percent off to be considered a bargain now.

Upscale retailer DKNY in New York is offering “Up to 90 percent off” on items left over from the holidays. Being able to get items at 10 percent of the original price certainly changes the perception of the value of an item. Shoppers aren’t going to run out and get a payday loan to buy the newest fashion trend if they think they can buy it later for a fraction of the price.

Strategies in the war on deflation

Some retailers are trying to find creative ways to combat this trend of slashing prices. Some electronics merchants are offering bundled products — throwing in a free DVD player with purchase of a new TV, for instance. But many market analysts do not believe this strategy will work.

Some retailers, like J. Crew are simply marking down their new merchandise from the beginning. Even though J. Crew is offering brand-new merchandise, many are already on sale for 25 to 40 percent off.

So what is the real price?

So, I have to question: If an item is already discounted 25 to 40 percent off when it hits the shelf, who is to say that’s not the actual price of the item?

It reminds me of those commercials starring Billy Mays, where he professes that the “Big City Slider Station” is really worth hundreds of dollars, even though no one in the history of the world has ever had to pay that much for one. In fact, if you ACT NOW, you can have one for only $30 and he’ll throw in an extra one! And a bunch of other free stuff. A gazillion dollar value for just $29.95!

Future of value perception

Yes, it will be interesting to see if this new trend in retail expectation causes stores to jack up their prices just so they can mark them down. I predict that will be the new trend.

In the meantime, if you’re thinking of taking out a payday loan to buy a Bedazzler or a year supply of OxiClean, you might want to hold off. Even if Billy Mays says you have to call within the next 10 minutes to take advantage of this GREAT DEAL, I’m sure the same commercial will be on again after your next paycheck. But if you’re worried about late fees on bills or bounced checks, a payday loan could be just the right fix.

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