Grocery Store Economics - A Lesson for Upper Elementary to High School

I'm a frugal shopper by nature. This week, my husband was laid off from his job and so I challenged myself to cut $50.00 off of our grocery bill.

I also enlisted the help of my fourteen year old son. The plan? Let's compare prices of every item we plan to purchase, and then we'll choose the lowest price, even if that meant going to a different store. We set off knowing that this shopping trip would take longer than any other we've had in a long time.

Here's what my fourteen year old learned.

1. Generics are not always cheaper. Think about it. Most people think, "I'll buy the store-brand and save money." They don't bother to check the price. On Saturday, I caught the management of all three stores I shop in participating in economic psychology. In about 50% of the cases, I saved money by:

A. Buying a brand name
B. Choosing alternative flavors of the product I wanted, if the price was lower.

Example: I usually purchase store-brand salsa. But on this day's trip, I discovered that the most popular flavor (Medium) was .49 cents more than the Mild or Hot store-brand flavors.

Grocery Store Economic Principle: A store makes money by raising the price on the most popular items.

Secondly, I remembered that this product was .39 cents cheaper two weeks ago. So I compared the brand names against the generic. I found that Newmann's Medium Salsa was .20 cents cheaper than the store brand medium salsa.

Store brand Medium $2.49
Store brand Mild $1.99
Store brand Hot $1.99
Newmann's Medium $2.19

So I got the flavor I wanted (Medium) for .20 cents cheaper.

2. Discount Stores are not always discounted.

Consumers must be wise. I shop a discount store. Over the past months, just as in every other store in America, prices have been creeping up. But rather than doing some mystery shopping of my own, I simply continued to pay the increasing prices. I had assumed I was getting the best deal, because, "I had done the research last year."

Boy was I wrong.

Grocery Store Economic Principle: Stores make money by making people relax into thinking they're getting a good deal.

Do not assume that you're getting a good deal. Check both price and quantity. You might be surprised to discover that a package of .99 cent cookies at one store has 10 less cookies or is a lighter weight, than at the store across the street at the same price.

Ex: Cookies at my regular grocer $1.09
Cookies at another store $ .99 (With more cookies/larger cookies!)

Ex: Milk at regular grocer $3.49
Milk at another store $2.79 (Not on sale...this is their regular price!)
Milk at shoppers club $3.09

From now on, I'm going to mystery shop once a month.

3. Shop sales items and loss leaders.

When something is on sale, and you use it regularly, stock up on it.

Grocery Store Economic Principle: Stores lure customers in for really low prices on some items. These are called loss leaders. The store makes very little money on these items. Then they strategically place other items throughout their store so that they can influence you to purchase items on impulse. Those items are not good deals and are purposely overpriced.

This is how a grocery store makes money.

So when I go into a store to purchase hamburger on sale for $1.79 a pound, I put my blinders on, walk directly to the hamburger and immediately go to the check out stand.

4. Grocery stores are designed to help the consumer to buy what they don't need.

We need cereal such as cornflakes at 1.19 a box. We don't need Count Chocula ceral at $3.99 a box. Where are the generic cornflakes? Top shelf way down on the end. Where is the Count Chocula cereal? Down near your six year old's eyes, dead center.

Grocery Store Economic Principle: Lower priced items are placed out of the way. Higher priced items will be easy to find.

Grocery Store Economic Principle: Product Placement is based on years of psychological research.

Look for the best buy. Don't give in to "ease." Be aware that the stores are looking out for themselves. The consumer has to choose well in order to spend wisely. Consumers must think actively outside of product placement psychology, in order to participate in good stewardship.

Not only did my son and I save ourselves $50.00 on our grocery bill, we exceeded that!

Two weeks of groceries for a family of six two weeks ago $300.00
Two weeks of groceries for a family of six yesterday $230.00
Total Savings $70.00

So grateful for grace,



©2008 Y.M.F.