Yahoo Finance Kmart: 'Misleading' tags can make Aussie shoppers spend more
The Aussie discount giant doesn't have sales, but red tags in the aisles might make you think, and spend differently.
A new kind of tag has emerged in the aisles of Kmart stores across the country and it could be encouraging shoppers to spend more at a time when financial pressure is building on Australians.
The eye-catching red tags in Kmart read ‘our price’ and may appear to represent a sale price in store but are actually just showing the normal asking price of the product.
Interestingly, Kmart does not run sales at any time of the year. They do have clearance items and did a permanent price drop of more than 100 items earlier this year but you won’t see traditional sales - like rival Big W’s toy sale.This is because the retail giant promotes “everyday low prices all year round”.
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But why bother adding additional tags in store? UNSW Business School professor Nitika Garg told Yahoo Finance it all came down to consumer psychology and businesses like Kmart seizing on the years shoppers had spent being trained to believe certain colours or tags indicated a discount or promotion.
“They are misusing that a little bit now,” the consumer-behaviour researcher said.
“Targeting consumers to say, ‘Our price is $10’ but your price was always $10 is misleading because it’s not a promotion.”
“Coles has done the same with the locked-in prices. It makes people think it’s a deal but it’s really saying, ‘we are holding the price as a constant’, and that is not a deal. I think they are doing it on purpose so people misinterpret them as deals and subconsciously go for it.”
Garg - who studies the influence of emotions on consumer judgment and decision making - said people would often keep certain products in mind to buy when they saw them on sale.
Tags ‘signalling savings with colours’ encourage them to purchase when they won’t actually see any savings at the register.
Shoppers feeling financial pressure in the cost-of-living crisis are particularly vulnerable to these advertising tactics.
“A lot of consumers are stretched on money and stretched on time. Imagine you have young kids at home, or a child with you on your shop, it makes it hard to do the due diligence required and that’s when you fall for these tactics,” Garg said.
She said the onus was increasingly on the consumer to be wary of tactics like this, particularly as regulations that could protect had lagged behind.
“We don’t have regulations around this because they are not saying it is a deal. They are just signaling that with the colour, and regulations have yet to catch up with these tactics.”
She warned consumers to be vigilant when shopping and to not fall into the trap of mindlessly spending, particularly as cost-of-living pressures continued to increase and Aussies were seeking out better deals.
Kmart’s overall strategy was to be the “lower price option” and the ‘our price’ tags aligned with that brand promise, Garg explained.
“Coles did it in the same way when they decided they didn’t want to go head to head with Woolworths on quality so they made price their promise as well,” she said.
“Now, you see all these yellow tickets and think they are deals, but they are being assigned to products that are not on any further promotion, which is confusing to the consumer.”
Savvy consumers might feel miffed by the tactic, but there’s a good reason it likely won’t hurt the bottom line of big players like Coles and Kmart.
“Who is the realistic competition for Kmart? We just don’t have someone in the market who could compete,” Garg said.
“But it’s not a good idea long term, as consumers do feel disappointed when they do it.“
Earlier this year, the UNSW School of Business released a list of strategies supermarkets used to make consumers spend more.
They included locked-in deals, calming music, bigger shopping trolleys and the store layout.
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