Friday, February 26, 2010

Loss Leaders- Get the Better End of the Bargain

Grocery stores have many tricks up their sleeves to making more money.
One technique used worldwide is the technique of "loss leaders".
Stores often sell certain items to the public at less than cost price. In other words, they are selling you an item so cheap that they are actually losing money on that item, they're not even breaking even.

The reason stores are willing to sell you items for less money than it costs them to purchase the stock is for two reasons.

The first one is because of store loyalty. Store X knows that if they become famous for good sales, they'll 'buy' you and you'll end up shopping at that store only because you'll want the bargains they offer. 
The second way that stores use loss leaders, connected to the first reason, is this. Stores know that if they offer a sale on ketchup, for example, you will come to the store to stock up on ketchup. While you're there, you'll also grab some burgers, relish, mustard, buns, some beer, etc... to go with your cheap ketchup. While the ketchup may be selling at 10 cents for a large bottle, a true bargain, you're enabling the store to make a profit off of you, because the profit that they're making on the buns, beer, relish, mustard and burgers more than offset the loss of the horrendously underpriced ketchup.

My local store uses their vegetable sales and meat sales as loss leaders. I'll admit, they do have my loyalty because of their unbeatable veggie prices. Even so, I want to make sure that I'm not getting tricked into spending more money than I can afford.

How do I do that?
Don't become too attached to your favorite store. For a while, I was only shopping at "my store" because they won me over with their vegetable prices. I would do all my shopping there and end up paying quite a bit of money for most fruits, even when they were in season. One day I discovered that my local mom and pop's store charged half the price for fruits than what "my store" charged for those same fruits. Since that day, I've made special trips to the Mom and Pop's just to buy cheaper fruit. I wouldn't let my loyalty to "my store" blind me to overinflated fruit prices.
That brings me to another point. When you are shopping for loss leaders, take advantage of the loss leaders and don't let the store lure you into buying more expensive products. If ketchup is cheap, buy that and stock up. Do not, however, buy overpriced chicken nuggets while you're already in the store. If you need to buy chicken nuggets and cannot make your own, wait till those chicken nuggets are on sale and stock up then. If your store never has sales on chicken nuggets, look around and comparison shop. Can you possibly get chicken nuggets for cheaper at another store? Can you control your impulses and not buy impulse buys when walking into the other store for cheaper chicken nuggets?
If you cannot do either of this, is it possible to just do without?

I have limited funds and don't need to be padding the pockets of the megabucks supermarket corporation. Sometimes, the only way to do that is do just do without. It won't kill you to never buy caramel fudge if you can never get it for very cheap. I never buy cottage cheese (ok, once in a blue moon) because it is so expensive here. The store lured me in because of their loss leaders. I want to make sure that I don't ever get tricked into paying more than I feel comfortable spending.

Do you feel you or the store get the better end of the bargain while shopping? Have you ever walked in for the sale item and realize at the register that you haven't saved anything at all because of all the extras you bought? 

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