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Grocery Store Pricing Strategies


johnb
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Notwithstanding the quality of the product, I just don't want to do business with a company where everything is always on special, all year round. If a box of sirloins is always on special from $89, marked down to $49, then it's not really a special at all.

This raises a broader point about food pricing. If a product is on "sale" half the time, and at "regular price" otherwise, what is the truly regular price? Orange juice, national brand soft drinks, box crackers, cultured dairy products, and many other items are sold this way, and most of the product is sold at the "sale" price. Seems to me the "sale " price is actually the true price, there never is any real sale price, and the higher price is a rip-off put there to extort extreme profits from those who don't pay attention, can't be bothered with shopping, and/or don't care what they are charged for things.

This is not the only way food manufacturers/retailers trap the unwary. Certain items, such as tuna, ketchup, and peanut butter, are often priced at a higher unit price in larger sizes than the smaller sizes. There is even a name for this practice among those who study such things--"surcharging." It varies from time to time, and among different geographical areas. Obviously, it entraps those who just reach for the larger size assuming it's the better deal.

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I have a similar issue with the "real" price for products at grocery stores that have those customer cards you swipe at the register. "Regular" price is x, but with the customer card (where they can track your spending), the "special" price is y? As annoying as that is, it's been more annoying the few times when I couldn't find my customer card or didn't have it because it wasn't a store I normally shop at, so I paid the full price and felt stupid for having done so.

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I used to be that person who decides pricing at a grocery store (Whole foods). At one time, I was the team leader of all the product buyer.coordinators for the stores from Philly to North Carolina.

Most sale pricing at Grocery stores is driven by the supplier. The supplier offers various kinds of incentives to the store in return for price performance. It is very rare for a grocery store to lower a price without a direct payment or special pricing from the supplier. So if a supplier offers 26 week of on program, that items will usually wind up on sale for 26 of the 52 weeks of the year. If the store passed up that offer from Tropicana, then other stores will ahve a sale and the one store will not AND be paying a higher price. So you take every discount on main moving items and high visibility items. The only sales you pass on are for products with sluggish sales (no matter what the price the sales remain the same or vary slightly) or for items you really don't carry in most of your stores.

WFM tried to institute a frequent shopper plan and it was a failure. But other stores do this successfully. I personally find it distasteful to reveal my personal shopping habbits so I never had a frequent shopping card even when at WFM. Of course we could have our items discounted using a privacy card... a card with no ID data attached for paranoid and privacy concerned shoppers.

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Then there are the "sales" at my large local chain - "Lets mark this half price and hope no one notices that the expiration date was 2 months ago".

Or maybe the chain has a bad warehouse buyer who bought waaaay too much the last buy in period and ow has another truck load on the way... and is trying to get rid of the old shit before the new shit also expires! Or that particular store got "plussed out" (ie sent the product by fiat of the central buyer) the product, never sold it, and the staff just put it out again when it went on sale again.

We had to plus out product all the time when we bought more product that sold on promo. We tried to plus out stuff immediately so it had long dating to sell by. But I do recall that truckload of potatoe chips I plussed out with 4 days remaining. We basically sent it to the stores at half price (2 for one at full markup is pretty amazing!) and told them to do anything to get rid of it and then they could sent it back once it expired. I plussed out something like 1200 cases and we got something like 1199 cases back. Our customers screamed at us when we tried to sell something just BEFORE its expiry date.

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WFM tried to institute a frequent shopper plan and it was a failure. But other stores do this successfully. I personally find it distasteful to reveal my personal shopping habbits so I never had a frequent shopping card even when at WFM. Of course we could have our items discounted using a privacy card... a card with no ID data attached for paranoid and privacy concerned shoppers.

Personally, I don't think anyone should give his real information when filling out those "application" forms for a store shopper card. I usually give whatever phony name comes into my head, my address as 1600 Pennsylvania Ave., and so on. I've never been questioned.

I read somewhere once a post by some guy who took advantage of the Safeway policy of thanking the customer by name when checking out, obviously using the name shown in the shopper card system. He used names like "Dister," so the poor clerk would say "thank you Mister Dister" and such. This opens up many creative possibilities, some not suitable for a "family" website such as DR. Shades of Major Major.

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As annoying as that is, it's been more annoying the few times when I couldn't find my customer card or didn't have it because it wasn't a store I normally shop at, so I paid the full price and felt stupid for having done so.

If you don't have your card, you can usually enter your phone number and the computer will find you. A few years ago I found myself in a Safeway in Edmunton, Alberta, without my Safeway card. My phone number worked even there. Also, after my wallet was stolen a few years later, a supermarket employee told me it was much easier to just enter a phone number each time than to replace those cards. So I don't even carry cards anymore.

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Personally, I don't think anyone should give his real information when filling out those "application" forms for a store shopper card.

A short mention about grocery store shopper cards in today's WP, and a Maryland lawmaker's proposal to get them under control. Click

Here is a link to a legal article about these cards, including the shortcomings of the California and Connecticut laws--worth plowing through if you're concerned about the privacy issues they raise. Legal Issues.

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