Despite the image that your grocer would like to project, a grocery store is a business. A supermarket is a big business, one that collects an enormous amount of money. Ever stop and think about how much cash is spent in a typical day at the supermarket nearest to your home? All of those people, if each of them even just bought a stick of gum, how much would that add up to?
It’s true – supermarkets make tons of dough but on a very small margin. The typical profit margin on a supermarket item is between one and two percent. That’s what attracts you to the supermarket when the convenience store is so much closer. To keep solvent, a grocery store has to sell a whole lot of stuff, and they have a bunch of tricks up their sleeve to make sure they do.
Ever notice the music in a supermarket is never upbeat and fast, always relaxed and slow? That’s to make you move a little slower, to take your time and browse. Ever notice that the aisles in the middle of the store with the higher priced items have more center islands? They act as obstacles, narrowing the aisle so you have to stop and look where you’re going. In so doing, you also look at the stuff on the shelves.
Consumer psychology is a very powerful science and one that governs most of the decisions that a supermarket makes regarding layout, product placement, signage, even pricing. How respected is the science consumer psychology? So much that when it was discovered that products on the ends of shelves were perceived as more valuable, companies started paying shelving fees of up to $1 million to be placed at the edges of the stores.
Supermarkets have a ton of ways to trick you into spending as much as they can. Here’s a list of the top five.
5: The Loss Leader
Quick, think of your last grocery list. Now think of the list before that, and before that one, and so on. Chances are there’s one or two items that appears on every one of those lists. There’s a very good chance that that specific item actually costs the grocery store money every time you purchase it.
We’ve already established that grocery stores are businesses that exist solely to take your money while twirling their handlebar mustaches and smoking long thin cigars. So why would a grocery store charge you less for milk than they themselves paid for it? Simple: To lure you into a spider’s web of consumer spendthrift.
The idea is that there are things everyone goes to the grocery for on a regular basis. Things they basically can’t live without. They sell these items at a loss in order to lead you into purchasing higher margin items. The typical example is milk. Most people buy milk regularly. It’s a reliable seller: People who buy milk need to replenish it as it spoils quickly and is an ingredient in many recipes. Believe it or not, most big grocery chains don’t make money on milk. But they do make money on all the stuff between the entrance to the store and the dairy case… which you will now realize is always at the very back of the store, right near the stockroom.
To get to the milk you’ve got to walk through aisles and aisles of other goods, remembering all of a sudden that the kid wants Chocolate Frosted Sugar Bombs and you kind of do need a new rice cooker. The loss leader is the grocery store’s version of the $25 complimentary play money card that casinos give to pensioners. They know they’re getting it back, plus.
4: You’re Happier With Fewer Choices
Consumer psychology studies have shown that people are actually happier when they have fewer options. It seems contrary to everything to the endless rows of boxes, bottles and jars, but it is actually in the interest of grocery stores to give you fewer options to choose from.
It turns out that when people have too many choices they feel overwhelmed and unable to make a decision. Furthermore they feel less satisfied and confident in the choice that they do make. How do grocery stores combat this while at the same time offering the vast selection that ensures everyone has the option to find their preferred product?
Imagine that you are in the pasta sauce section of your local grocery store, looking at the twenty five foot long, four shelf tall cornucopia of tomato and cheese and vegetables. Now imagine that all of the packages looked exactly the same. Same colors, shapes and materials. All jars or all bottles or all cans. The only difference being the ingredients and names. If you just experienced a moment of paralyzing indecision, you wouldn’t be alone.
Now remember the shelf as you know it. Some sauce comes in jars and some in cans. This tells you which are fancier and more expensive. The jars may be glass or plastic, again an indication of price and sophistication. The colors on the label further segregate your choices based on ingredients. All of this option funneling serves to help you find what you are looking for and choose faster.
3: You Spend More When You’re Hungry
One wise piece of advice I was told when I was young was never go food shopping hungry. You won’t stick to your list and you’ll find yourself buying all sorts of unnecessary things that just look good to a person who hasn’t had dinner yet. If you’re so hungry that the chunks of meat on a dog food can look delicious you’re just not going to make wise purchasing decisions. Lots of people know this. Some of them work at grocery stores. And so they have a very simple plan to get you to spend money: They get you hungry.
As surely as you can smell the french fries cooking from outside a McDonalds, if your grocery store has a rotisserie chicken stand or salad bar, the chances are it’s within sniffing distance of the door. Doubt that’s there to get you to be a less disciplined shopper? Ask yourself this – when was the last time you picked up a rotisserie chicken on the way into the store? Who would? You don’t want it on the bottom of your cart getting squashed and cold.
Just in case you aren’t hungry enough for a whiff of herbs and poultry to get your mouth watering, those free sample stands every few aisles ought to whet your appetite. Yes, those samples do introduce you to new products, but they also serve as appetizers to get you to forget your list and go on a spree.
2: And Speaking of The Front Of The Store…
The front of the grocery store is the shopfront window of the grocery world. Just like retail locations have big window displays to inspire you to a specific mood, the grocery store has the entrance. And the entrance is made to put you in a good mood. Happy people spend more freely. So – what’s at the front of the grocery store?
Flowers, produce, cheese and wine – all the fruits of prosperity. The sort of stuff you bring on a nice picnic, or to a party. And the most common of these is the produce. Now, picture a produce aisle. What’s it look like? It’s bright, it’s colorful, it’s exciting. It’s the grownup equivalent of one of those party house ball pits. Much like the flowers that have no other reason to be near fruits and vegetables other than to stimulate your color receptors.
Now, think of Walmart. When you walk into a Walmart and see the produce section right at the front, just look to the left – what’s there? Is it… the bakery? Why yes, it is! And why is the bakery there? Well, it’s bland looking so it’s not visually exciting, so it feeds off the exciting colors of the produce section. And it’s full of delicious, completely non-essential, high-margin items that you’re more likely to buy when you’re excited.
1: You’re Buying And Tossing Far Too Often
Remember the first entry on this list, the loss leader? Well milk doesn’t work as a loss leader unless you have to buy it at a reliable rate. And the more often that is, the better it works. Whenever you buy food at the grocery store it’s got a “sell by” or “eat by” or “best by” date stamped on it. That date seems like it’s there to tell you when it’s safe to ingest the food you just bought but, in reality, those dates are usually incredibly conservative.
“Good,” you may say, “better to err on the side of caution than to end up drinking chunky milk,” but that thought itself illustrates the problem: It’s easy to tell when food is bad. Most perishable items such as eggs, milk, juice and meat smell absolutely terrible when they go bad. You can tell very easily, if you know what to look for, when they even start to go bad.
Still, that doesn’t mean you shouldn’t be protected from buying food that is about to start to go bad. The problem is that the sell-by date on most items is not only arbitrary but not binding at all – there’s no law requiring stores to remove most items from the shelves after their sell by date has expired.
Best by dates convince you to toss out your perfectly good milk (which lasts up to ten days past the printed date), butter (up to two months, in the fridge) and beef (up to 8 months in the freezer) and go buy more. That’s one way a grocery can ensure you keep buying.