On April 1, 2011, the Loft (via its facebook fanpage) announced the launch of its spring sale, which offered an additional 50% off all sale styles. 96 people “liked” this status, and 20 people felt strongly enough about the announcement to leave a comment. Almost 50% of the commenters, however, expressed frustrations about the new sale.
One impassioned commenter made the following remark:
The pricing practice that frustrated the commenter above is called price discrimination, and it is used by many retailers. Price discrimination occurs when a seller charges different prices for the same product when there is no cost difference in supplying the product. Teacher discounts at clothing stores, student and older adult discounts at the movie theater, seasonal rates at hotels, bulk-discounts at supermarkets are all examples we see often.
Why would a retailer engage in the practice of price discrimination? Nonuniform or different pricing usually translates into increased profits for retailers. As customers, we all have different preferences for products. A retailer tries to match its prices to the maximum that customers are willing to pay. Charging different prices maximizes the possibilities for retailers to gain more profits.
Why should bargain shoppers favor price discrimination? Our demand for many products is elastic and hence increases as prices fall. We get to pay cheap prices because of price discrimination. The Loft zip pocket dress (in red passion) retailed for $79.50. I love that dress, but would have never paid $79.50 for it. Many customers were willing to pay that price, though, as evidenced by the dress selling out online before it was ever marked down. The dress eventually went on sale in stores, and when I bought it, I spent $30 (a price lower than what I was even willing to pay, yielding a consumer surplus for myself).
Why were so many commenters upset after reading the Loft facebook announcement? Well, the Loft let them know that they were charged a higher price for clothing that customers the week of the announcement would have paid less for. So, they felt cheated. But, were they?
Savvy customers, those that take the time to seek the best deal, folks that never buy anything without some research (price, preferences, availability, timing, and so on), benefit the most from price discrimination. Well, savvy customers and, of course, clothing retailers benefit a lot from price discrimination. I was in line at the Loft on Saturday and the customer ahead of me was buying the same lace tee as I was. She checked out and did not use the Friends and Family coupon (and the Loft sure did let her). I purchased the same top as she did, but spent $13 less. She may not have cared, but I know I would. Would you?
I definitely understand why LOFT's customers felt cheated – we've all felt that burn before when we buy something, only to see it marked down the next day.
I think it's just part of the game, though – after shopping at LOFT for .2 seconds I realized I should NEVER buy anything FP, and even with a sale (like F&F or $x off $x purchase) I could still get a better price if I wait a week or two. Generally speaking, my rule is to wait until a 50% off sale items sale to buy anything from LOFT unless I LOVE it.
I was just thinking about this myself today. I was upset that I missed the F&F discount over the weekend. I usually only shop the sales section, and I was looking forward to getting a good deal on some cloths. However, I logged onto the website today and I saw that all sale items are on sale for 40% the sale price. Smh. Its very confusing with all of these sales coming and going. One day day its 50% off and the next day its only 30% off sale items. It pays to wait to buy items from Loft, even when its on sale.
Hi – I am certainly delighted to discove this. cool job!
Im a Ann Taylor Loft employee of 5 1/2 years and a full time teacher of 6 1/2 years so I know what it's like to shop for a deal. The reason I started working for them was to get a great discount on clothes. This is not just for the LOFT ladies but New York and Co, Express and The Limited ALL do this but if you are a SAVY SHOPPER..U WILL NEVER PAY FULL PRICE
@Ashley getting dressed: Thanks for sharing how you derived your current shopping rule! 50% off sale items is my favorite offer too. Like you, some items can move me before prices get that low 🙂
@Addy: So true. If you miss one sale, you can be sure there will be another. The F&F sale, though, was actually better than advertised. All the stores had 30% off all items. If you were holding an F&F discount, you got an additional 30% off. So, that sale was actually slightly better than the 50% off event.
@Shevy: What a fantastic work arrangement! I heard that the Loft's employee discount is quite generous too 🙂 You are so right, lots of stores engage in this pricing practice. Those of us that are aware know what to do.
what I dislike is that Loft will take $5 off a full priced item and put it in the sale section
I love you blog, and have been reading through and looking at your amazing outfits! I think the economics of fashion and retail is really very interesting. I work in PR for Goodwill Industries and buy 99% of my wardrobe at Goodwill. I have found everything from Michael Kors, Armani, Ann Taylor, Banana Republic…..the list goes on. I have a hard time even paying 50% off retail when I just bought an Anthropologie dress with tags on it for $8.99! Keep up the great work!
Thanks @DeeAnna! I will certainly be watching your movements closely over at "A Little Junk in My Trunk." I have not given Goodwill shopping a serious chance yet. With your expertise, I can definitely learn some critical strategies.
Girl, you are brilliant. I worked at Loft while in Grad School and also follow the never pay FP rule. Why would you? As a marketer, a Savvy Fashionista, and an ex-Loft employee I appreciate the combination of information, smarts, and style on your blog.
Keep it up.
Girl, you are great. I worked at Loft part time while I was in graduate school. Having always loved a deal, working there quickly taught me never, and I mean NEVER to pay full price for an item. As a marketing, a savvy fashionista, and a lover of a good deal I love your blog. The combination of information, style and smarts is simply brilliant. Keep it up!