If you live in the Upstate region of New York I am sure you have noticed some of the friendly competition that has been ongoing between grocery stores over the past year.
In light, we the consumers have been benefiting greatly. However, please don’t get me wrong grocery stores are like any retail establishment, they want your business (or money). How do grocery stores increase their profits? It is all based on marketing strategies. Let me show you how.
Store Loyalty Cards
Love them or hate them; loyalty cards benefit everyone (even the store). Card carrying members receive incentives to shop. These incentives include, lower prices on items your purchase (if you use your card), plus the benefit of signing up for family, baby & pet clubs (earn points for purchase made in return for product or cash credit).
Okay, so how does the store benefit from loyalty card programs? Simple, they can see what purchases YOU made and market your spending habits to benefit store profits.
According to the Food Shopper Insights 2011 survey data from Packaged Facts, 31% of polled consumers who had shopped for groceries in the previous 24 hours had received, seen or heard some form of marketing communication from the retail store where they shopped. The actual percentage is probably much higher since many shoppers are unaware of all of the advertising they receive.
I can tell you between the “battling” stores in our area for consumer business advertising has been astounding. Not only is advertising in the form of TV commercials, but through the use of newspapers, magazine and coupons. Yes, coupons!!! This leads me to my next point.
Simply put a loss leaders is lowering prices on a few items to attract consumers to their store. These items will actually produce a “loss” to the store based on the price set. Over the last year, I have seen loss leaders in the form of “coupons” found within ad fliers. These are enticing prices to get you to purchase other items from their store. Think of leaders as bait and we are the fish. Hook, line & sinker.
Ever run into the store for just a gallon of milk and end up purchasing other items on the way out? Stores realize that product placement is extremely important. In this case, milk or the diary case is strategically placed in the back furthest corner of the store. They want you to travel around the store in hopes of you purchasing other items “oh yea, I forgot I needed this!!” They just influenced you to spend $20 more on groceries.
Products are placed on the shelves for a specific purposes too. Items that are more expensive are usually placed at eye level. Fun & sugary items geared for children are placed lower on the shelves for them to see. They allow your children to help market your spending habits. We have all heard “Mommy can I have this?”
The end caps of the aisles can also be a problem area. They are set up to draw your attention to certain products. Consumers usually assume that the products on the end caps are sale items (sometimes they are), but this is rarely the case.
It is so important to stick to your list and yes, purchase those loss leader items if you use them. Try not to fall into the advertising trap. I read somewhere and wish I could recall where I read this static, but consumers who do not use a list when shopping purchase 60% more then what they thought they needed. Stores bank on your impulse buys.
In order to save the most money on your groceries, you need to be aware of the stores strategies and shop in a way which counteracts them.