Consumer price inflation has been heading upward for the last year, spurred by high gasoline prices and the effect that those increases have had on production and deliveries. The inflation rate hasn’t been this high in a generation and worldwide, people are watching their pocketbooks carefully so that they can meet expenses.
Some companies lure customers in with coupons, like the great Intertops Poker bonus deals and outward indications of bargains. But behind the scenes, many companies are engaging in a variety of different strategies that have allowed them to hike prices and retain customers. Some of the things you might notice when you’re doing your cost comparisons:
Value Products
For many years, many supermarket chains have been producing their own products at reduced costs. Store-brand cereals, ketchup, canned products and other basic commodities are offered at low prices. That draws in the customers who are looking to lower their shopping bills.
These chains, however, aren’t doing this out for altruistic reasons. They know that most people are trying to save time as well as money so they won’t be visiting multiple stores for food shopping.
Therefore, the store brands are only half the story. Prices on other items including fruits and vegetables are often higher than are generally found at other stores. In the end, there are not many savings. If you’re serious about saving money on your food bills, be prepared to visit a few different stores so that you can buy what’s cheapest at each store.
Shrinkflation
If you see a product whose price hasn’t changed, don’t automatically assume that you’re getting a great bargain. It’s more than likely that, in this era when all prices are rising, there’s less in the can or box than there once was. The price of a product is the same but the contents of the package have shrunk. The biggest rub is that when and if prices drop, the manufacturer will promote a new, bigger product that features “extra free”.
This strategy is made easier by the fact that most consumers don’t really know the price of the products that they’re buying by weight. How many of us know how many ounces there is in the bottle of ketchup that we buy? So how many of us would notice when that number shrinks by an ounce or two?
In addition, reference prices (which you can look at to see comparisons of different products on a cost-per-amount basis) are now less readily visible due to barcoding that has replaced individual labels
On the other hand, online shopping empowers consumers to make their own comparisons. You can do a simple web search to immediately compare the price per unit of volume/weight.
Other Supermarket Techniques
Beyond hiding price hikes, supermarkets are well-versed in psychological techniques to convince consumers to buy more and at higher prices, than they would have had they thought out their purchases more carefully.
Some of these strategies include:
1. Music
supermarkets play easy listening or classical music because it slows down the shopper and makes him/her shop slower. When you shop more slowly, you spend more. The more time that you are in the supermarket, the higher the chance that you’ll start making choices with the emotional part of your brain as opposed to the logical part of your brain. Impulse buying increases. Other things that supermarkets do – like Vegas casinos – is to eliminate clocks and windows from the supermarket, anything that allows you to keep track of time. By taking longer to do your shopping, you’ll spend more money.
2. Eye level
the more expensive products will be at eye level. It’s not hard to understand the logic in that – many shoppers take the product that’s easiest to reach for which, if that’s the more expensive brand, means more money for the supermarket.
3. Bargain offers
Sometimes, advertised bargains aren’t the best deals. In fact, a similar product at full price might be the better deal. The advertisements for good deals make us think that we’re getting the better price but it’s not always the case. One UK consumer association found that the majority of pro-offered deals don’t deliver any savings whatsoever.
Supermarkets get away with this by making you assume that advertised bargains are, in fact, better deals. But buyer beware. This is especially true when the supermarket offers 2-for-1 deals or other multi-buy deals. Such ads encourage you to buy more than you would otherwise intend. But in addition, sometimes the math doesn’t add up and you end up paying MORE for multiple items than you would have had you bought them one by one.
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4. Honesty
When all else fails, some companies have found it prudent to simply be honest with their customers about their need to raise prices. Time Magazine reports that a number of companies have actually experienced growth by simply publicizing the situation with rising prices for production and distribution and saying frankly “sorry but this is what we need to do.” A number of companies that have tried this strategy are finding that they are enjoying better sales than ever.