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How Retail Stores Get You to Spend More Money

Ever wonder why you walk into a store for one thing and leave with five? You've just experienced The Gruen Effect. Named after architect Victor Gruen - who accidentally invented the modern mall - this psychological trick uses store design to disorient shoppers and drive impulse buys. From grocery stores hiding milk in the back, to Zara's maze-like layouts and malls with no clocks, it's all engineered to make you shop longer and spend more. For more deep dives into American consumerism, brand psychology, and marketing tactics, subscribe to The Hustle.

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00:00 Speaker A

This billion-dollar fashion business is stuck in the stone Age.

00:02 Speaker A

Fast fashion thrives on digital commerce. Brands like Shein, H&M, and Zara all make billions each year from selling their clothes online.

00:08 Speaker A

So, why would Primark, a low-cost fashion brand like Shein, refuse to sell anything online?

00:13 Speaker A

Primark has built everything around in-person shopping.

00:16 Speaker A

Massive floors, floor ready inventory. You walk in, you buy stuff. That's it.

00:20 Speaker A

But e-commerce, that breaks everything.

00:22 Speaker A

You need local warehouses, workers to pack every order, a system for returns.

00:27 Speaker A

And in fast fashion, return rates can hit 50%.

00:30 Speaker A

If Primark sold $4 shorts online, they'd likely spend around $7 just to ship it and then probably lose it to a return.

00:36 Speaker A

Their CEO said it best, at our price points, online doesn't just take some of the margin, it takes all of it.

00:41 Speaker A

On the other hand, Shein was built for e-commerce. Primark wasn't.

00:44 Speaker A

Even during COVID, which saw them lose 60% of their profits, Primark didn't pivot to online.

00:49 Speaker A

And ultimately, they were rewarded for that commitment. By 2024, they rebounded even surpassing pre-covid numbers.

00:54 Speaker A

So, they're not behind. They're just playing a different game.

00:58 Speaker A

For more business and tech stories like this, subscribe to The Hustle.

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