MIT study reveals research on the use of "sale" signs in stores.

This Is the Reason Why You See “Sale” Signs Everywhere When Walking Into a Store

This Is the Reason Why You See “Sale” Signs Everywhere When Walking Into a Store

Business Insider
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Jan. 12 2015 3:14 PM

This Is the Reason Why You See “Sale” Signs Everywhere When Walking Into a Store

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Sale signs: When it’s red, it’s read.

Photo by Dan Kitwood/Getty Images

This post originally appeared in Business Insider.

Think back to the last time a store had an unadvertised sale.

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You probably can't.

That's because, according to Mark Ellwood, author of Bargain Fever: How to Shop in a Discounted World, those big red sale signs that you see plastered all over stores are what gets shoppers to buy, not the actual marked-down prices.

Ellwood says these signs are known as "information cues" in the retail world, and we're powerless at resisting them—no matter if there's actually a sale going on.

Ellwood cites an MIT study where customers randomly received one of three catalogs, all featuring the same dress but at different prices ($54, $49, and $44).

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In the first round of the study, the $49 dress—the cheapest option—was the best-seller. In the second round, though, an all-caps “for sale” sign was added next to each of the dresses. In this round, each price level sold equally as many dresses.

It wasn't a one-off. The author cites a second (unpublished) MIT study to caution consumers to check prices before grabbing the item with the big red sticker:

In this experiment, 200 different products from 18 different locations of the same convenience store chain were put into three groups. Products in the first group (the control group) were sold in the same way at the same price as always. Products in the second group (the quietly discounted group) were marked down 12 percent, but no sale sign was used. Products in the third group were marked with a red and yellow, all-caps “low price” sticker, but the price remained the same as always. Ellwood says, “The results were telling.”

He writes:

The quietly discounted group sold just over 17% more units than the control. But the group with the LOW PRICE sticker also had increased sales, in this case by 3.4%. That profit uptick cost the store nothing more than the price of printing a few flimsy sheets of paper.
It's a reminder to double check the true discount any time you're nudged by a splashy sign to pick up a supposed special offer in the grocery store.
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And it's not just a coincidence that all those information cues are red, either.

According to Ellwood, red is an “eye-catching color”—literally—because it has the longest wavelength, making something that is red appear closer to us than it actually is.

Ellwood also points out that after black and white, red is the next color to appear in a language.

He writes:

The longer the word for a color has been in use ... the greater the number of associations, meanings, and nuances it can acquire. In this way, the color itself gains more impact. In other words, since we've been using the word for red far longer than that for, say, purple, it's embedded more deeply into our psyche. Thanks to both history and physiology, we notice a bright red sale sign more quickly and with greater interest than any other color.

Sarah writes for the money vertical at Business Insider.