How Dollar Tree Tricks You Into Spending More Money

Walking into a dollar store can cost you a lot more than you might expect, and there are certain tricks the store uses to make that happen. Though many might wonder just how dollar stores make money, the answer goes well beyond low prices on food and other products. Dollar stores can make money and get customers to spend more money by using a number of tactics that are designed into the store's size and setup too.

While one of the best parts of dollar stores is the low prices, customers sometimes forget that many of the items are not just one dollar. While Dollar Tree actually does offer all its items for just $1, it is the anomaly amongst dollar stores. Most other competitors have higher prices tags of three, five, and upwards of 10 dollars. That means the overall total adds up more quickly (via Money Talks News).

Prices aside, there's another sneaky trick dollar stores use that most customers do not consider. The size of most dollar stores is just one-eighteenth of the size of a normal Walmart. That means customers can cover the whole store much more easily and faster. By covering the whole store, customers are likely to find more items to purchase. The layout of the store also features the best, newest items at the front of the store to bait customers into buying them (via Business Insider).

Marketing professor Priya Raghubir explains the reasoning for the store's layout, saying, "It's a super interesting effect which essentially shows that if you buy something which is really cheap, then, after that, the likelihood of your buying something else that is more expensive increase. So, shopping creates a momentum." The marketing term for that, unsurprisingly, is the momentum effect. 

In addition to the size and setup of dollar stores, there's another non-obvious way the stores distract customers into spending more. That tactic involves the size of the stores' products. Many items are travel-sized or simply smaller packages that hold less of the product. This often occurs with items like flour, milk, chips, and raisins (via The Guardian).

For example, a box at the dollar store that holds four to five ounces of the product might be sold for one dollar. A box of the same product that holds around 70 ounces that are sold at another retail store like Walmart could cost around $10 or $11. That's a 52 percent mark up at the dollar store over the big box store.

While deep-discount stores like Dollar Tree are expanding and taking advantage of this sneaky trick, it is important for savvy shoppers to do their homework. This trick can be used to take advantage of people who are only buying what they can afford at the moment (via Fortune). So, do your homework before shopping for some groceries at a dollar store.