The Sales Strategy That Turns Shopping Into a Game

Everyone who’s ever shopped for clothes knows the dilemma. You find the perfect item, but you can’t shake the feeling that it will be on sale next week. Retailers count on this uncertainty. With markups ranging from 100% to 500% over wholesale, their pricing strategy puts the customer at their mercy. You can either pay the price you see today or walk away, never knowing if or when a discount might appear. The more you want something, the more you’re expected to pay.

But what if a store did the exact opposite? What if the price tag told you not just today’s price, but the exact dates when the price would drop further? That’s the foundation of a fascinating and surprisingly effective strategy called the automatic markdown. One New York apparel retailer, Syms, built its business on this transparent approach, turning the typical pricing model on its head.

A Price Tag That Plays a Game With You

At Syms, a price tag on a women's dress was a roadmap for the customer. It showed the original nationally advertised price, the initial "Syms price," and a series of three future, lower prices, each triggered at ten-day intervals. This transparency does something fascinating to the psychology of shopping. Unlike a typical store where a clerk would never tell you an item is going on sale next week, Syms laid all its cards on the table.

This system has at least six powerful advantages over conventional pricing.

First, it immediately frames the item as a good deal. When a shopper sees a dress that was advertised elsewhere for $249 now selling for $209 at Syms, it already feels like it’s on sale. This initial comparison anchors the value in the customer's mind.

Second, it creates a sense of urgency. Knowing the price is scheduled to drop adds a layer of time pressure. In a normal store, you might go home to think about it, assuming the dress will still be there later. But at Syms, you know that with each price drop, the dress becomes more appealing to more people. This creates a calculated risk: wait for a better price and someone else might snatch it up. It’s particularly effective for fashion items that have a short shelf life.

Third, it cleverly serves customers with different budgets. Shoppers who are less price-sensitive and want the dress can pay the higher price. More budget-conscious shoppers can wait for a lower price, accepting the risk of a smaller selection. This allows the store to capture sales from both ends of the market simultaneously.

Fourth, it makes shopping more exciting. Customers often describe the experience as a "game" or a "gamble." There's the thrill of finding a bargain and the suspense of waiting for the next price drop, creating a fun competition between strangers for a coveted item.

Fifth, it drives repeat traffic. Price-conscious shoppers have a concrete reason to return to the store again and again. Even if the item they were watching is gone, they’re already in the store, and marketers know that the more time someone spends inside, the more likely they are to make an impulse purchase.

Finally, this transparency reduces buyer's remorse. When you have all the price information upfront, you can make a decision you feel good about, solidifying your trust in the store. On top of that, the system saves the store a fortune in labor costs by eliminating the need to manually retag items for every sale.

The Original Automatic Bargain Basement

While Syms perfected this model for its niche, it wasn't the first. That honor belongs to a Boston institution that opened in 1909: Filene’s Basement. Edward A. Filene’s concept was so radical that competitors called it “Filene’s Folly.” He created what was essentially a within his family's department store, running on a simple but revolutionary rule.

Prices were automatically cut by 25% after 12 days. Six days later, they dropped to 50% off. Another six days, and they hit 75% off. If an item was still on the rack six days after that, it was donated to charity. Critics were convinced that everyone would just wait for the lowest price. But Filene understood people better than they did. The store was a massive success, eventually accounting for a third of the entire department store's revenue. He proved that most people would rather pay a little more to guarantee they get what they want. By 1950, the Basement was selling half a million dresses a year, with 90% selling before the first scheduled markdown.

An Old Idea Finds New Life

Despite its proven success, surprisingly few businesses have adopted the automatic markdown. One notable exception is Harris Rosen, an Orlando hotelier. After losing jobs at Hilton and Disney, Rosen started his own by buying a hotel in 1974 right before the OPEC oil embargo crushed Florida tourism.

Facing empty rooms, Rosen got creative. He drove to where coach-tour operators were based and asked them what they’d be willing to pay, signing deals for as low as $7 a night. It worked. Later, he adapted the Filene’s model to his hotel rooms: the later in the day it got, the cheaper the price for an unsold room became. This strategy kept his occupancy rates over 90% for years, far outpacing competitors. His story is a testament to how a clever pricing strategy can be the core of a thriving .

More recently, a discount wine merchant called Bin Ends and the grocery chain Fresh & Easy have experimented with similar models for products with a limited shelf life. The principle works best when three conditions are met: the product has a time value (like fashion or fresh food), customers are emotionally invested, and there's a perception of scarcity.

The Secret Sauce: A Slow-Motion Auction

The reason this system works so well is that it’s essentially a slow-motion Dutch auction—an auction that runs from a high price down to a low one. The auctioneer keeps lowering the price until a bidder jumps in. By waiting, you risk someone else grabbing the prize. This format has been used for everything from Dutch flower markets to Google’s $2.7 billion IPO.

Research from economists at Pennsylvania State University sheds light on why a Dutch auction, like the one at Syms or Filene’s, is so effective. They found that when an auction moves slowly, bidders get impatient. The mental effort of waiting and the fear of losing out become more significant than the potential savings. As a result, people often end up bidding more than they might have in a fast-paced, conventional auction.

For a retail or an established store, this pricing method offers an incredible advantage. The simple, century-old markdown system Filene pioneered can be just as effective at optimizing prices as modern, multimillion-dollar software. It frames value, creates urgency, encourages repeat visits, and even makes shopping fun. It’s a powerful reminder that sometimes the most innovative business strategies are the ones that have been hiding in plain sight all along. This is a great lesson for anyone trying to build a new retail concept, even a small .