Wednesday, October 6, 2010

Relying on Loss Leaders- Wise or Foolish?

We eat a lot of vegetable based meals in my house, so when a massive heatwave ruined many crops in the area, and local produce prices skyrocketed, I had to really strategize to try to keep our budget in check. I usually only buy vegetables on extreme sale, allowing me to buy things at a fraction of their going rate. Because of the heatwave, this vegetable sale was first put on hold, and then very limited, putting a serious crimp in our savings plan and ability to feed my family vegetables cheaply.
When lamenting my frustration with the situation to a friend, her matter-of-fact response was that building my budget around loss leaders is foolish because I'm too dependent on things remaining status-quo, and it's only a wonder I didn't get burned sooner.

Is relying on coupons, sales, and loss leaders truly as foolish as my friend claims it is?

Relying on Loss Leaders
Relying on loss leaders, sale items, and couponing to keep your grocery costs low does have one main drawback- it puts you at the "mercy" of the whims of the store. If the store decides to discontinue selling certain items as loss leaders, or to stop carrying certain sale items, you would need to get the more expensive alternative, or otherwise forgo that food entirely and make do without.

However, if one didn't buy sale items or loss leaders at all, they'd also be at the mercy of the whims of the store. Just as stores change around which items are on sale, they also raise and lower (though, for the most part, only raise) prices as they see fit. Even if you usually only buy things at regular prices, when stores raise their prices, your grocery budget will definitely be effected as much as that of the loss leader shopper, if not more.

Loss leaders are a marketing strategy that nearly every supermarket employs. In essence, its when stores sell certain items at very attractive prices, at a loss to themselves, in the hopes that such prices will lure you in and gain your loyalty as a customer, who is then likely to spend a lot of money on expensive non sale items. There's no guarantee for that to happen, but the store owners are willing to take that gamble, and do take into consideration that a small percentage of people like myself will only buy the sale items and nothing else. Relying on sale items and loss leaders to keep your food costs lower is a terrific solution because the strategy of loss leaders is such a beneficial one that store will almost always have some loss leaders; they just might decide to switch what their loss leaders and sale items will be.

Flexibility is Key
In order to be able to rely on loss leaders and sale items, you need to be flexible. To always bet that bread will be sold as a loss leader and to never to expect the price of this staple to differ would be silly and unreasonable. However, expecting some items to always be sold as loss leaders is not foolish. You just have to be willing to make do with what is on sale.

My strategy when grocery shopping is to buy whatever is cheap, so long as it is healthy, and will be eaten. My menu changes based on which loss leaders I can find that trip. For example, at my local grocery store, I usually find cucumbers, tomatoes, cabbage, carrots, peppers, onions and potatoes being sold as loss leaders (so long as I go on the weekly vegetable sale day in the store). The past few weeks though, cabbage, tomatoes, peppers, and cucumbers were quite expensive; the loss leaders being sold were eggplant, cauliflower, beets, oranges, and carrots as well as onions and potatoes. Instead of buying my usuals, I only bought what was being sold as loss leaders this week, and have adjusted my menu accordingly. Instead of fresh salads, we're having more cooked vegetables. Instead of tomatoes for vitamin C, we're having oranges. I'm figuring out lots of recipes for beets and eggplants and cooking those instead of my usual cabbage and peppers.
Flexibility and entering the grocery store with the attitude that you're willing to try something new and different is imperative if you want to be able to lower your grocery budget via loss leaders.
Some people walk into the store and say “I need cucumbers, tomatoes, rice, milk, cheese, chicken, etc.” and then purchase them, no matter what the price, because they are “needs”. I, on the other hand, say that we need an array of vitamins and minerals from different sources, fiber, protein, and starch and always make sure to have a variety of each in the house. How exactly I'll fill that quota depends on the loss leaders.
If rice is cheap, I'll get that as the starch. If bread is, then that. Maybe I'll get noodles or potatoes or flour; it all depends on which things are being sold at good prices. Very rare is the time that I can't find at least one starch being sold at a good price.
Protein can vary as well. If fish is on sale, I'll get that. If meat or chicken is, then that will be my option that shopping trip. Sometimes I'll get eggs or milk to fill that need. If there are none of the other things on sale, I'll probably plan in some bean meals and find the cheapest bean being sold, as even beans sold at regular prices tend to be good deals financially.
And as I mentioned before, the vegetables being bought will depend on which ones I can get as a loss leader, and even if none have exceptionally good prices, I'll just buy whichever vegetable is cheapest per pound.
Yes, I rely a lot on loss leaders to lower my budget. But I don't only ever buy loss leaders. I will buy chicken even when it's not on sale, and I will buy condiments and milk when not on sale, etc. However, the loss leaders are the bulk of my purchases, and the other things may or may not be added to my cart, depending on how much surplus cash I have available.

Stockpiling and Loss Leaders
However, even being the smartest, most creative cook can be limited if she was only cooking the few foods that were on sale the last shopping trip. This is where stockpiles come in handy.
Whenever you see items being sold at great prices, buy, and buy lots. Don't just think about how much food you'll need until your next shop. You want to stock up on as many loss leaders as you can, precisely because the loss leaders and sale items being sold vary from day to day and week to week.

If you enjoy noodles, it would be a shame to need to pay higher prices or forgo them entirely simply because the store decided not to sell them at a loss that week. By keeping large quantities of things bought cheaply, you'll be able to take advantage of the savings by shopping for loss leaders all the time.
Even vegetables and chicken and milk bought as loss leaders can be preserved for the future. I still have beef roasts in my freezer from when they was being sold for 10 cents a pound a few months ago, and I'm saving them for a special occasion. Some of the eggplants I bought as loss leaders yesterday are currently dehydrating in my homemade dehydrator.
Stockpiling is very important to do if you want to be able to lower your grocery budget by factoring in loss leaders and sales.

Am I being foolish by taking loss leaders into account when planning my grocery budget? I think not. By using the proper skills, one can always take advantage of sales, loss leaders, and coupons and lower their grocery budget drastically. It would be a shame to spend more than you have to simply because you discount the savings that can be had by using sales and loss leaders to your advantage.

What do you think? Do you take loss leaders, sales, and couponing into consideration when planning your grocery budget? Do you think doing that is a foolish decision or a wise one?

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