Retailers commonly use clearance sales to attract shoppers.
But the promotions are often are often a “smoke and mirrors” tactic, with retailers falsely inflating prices in order to make the mark-downs seem more attractive, reports Kim Bhasin at The Huffington Post.
A JCPenney worker claims he was fired after he accused the company of doubling prices on many items, only to put them on “clearance” later, Bhasin writes.
“I saw a lot of pricing teams going through the store, raising the prices, mostly doubling — towels and clothing,” the worker told NBC’s Jeff Rossen in July 2013. “Then they would go on sale, and they wouldn’t always go on sale for 50% off.”
Now, the worker, who says he was fired days later, claims JCPenney contested his claim for unemployment benefits and filed an arbitration petition against him, Bhasin reports, adding that the exposes a well-kept secret in the retail industry.
Retailers have been manipulating customers to crave discounts for years, Mark Elwood, author of Bargain Fever: How To Shop In A Discounted World, tells Bhasin. As a result, retailers often manipulate pricing to create the illusion of sales.
“Once customers are taught to crave discounts, it becomes addictive, and they keep coming back for more,” Bhasin writes.
In other words, retailers now have to offer discounts so that customers will be enticed to buy.
Former JCPenney CEO Ron Johnson famously declared that he was eliminating sale prices and selling items at their true value.
The strategy flopped because customers felt like they didn’t have a reason to go into stores without a sale.
“Coupons were a drug,” Johnson said after his strategy had flopped. “They really drove traffic.”
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.