Row Nine

Wednesday, May 19, 2010

Excellent Article To Read About Grocery Pricing

Hi Savvy Shoppers:

First off, a quick please note that most of my websites are down right now and we are working diligently to get them back up. Sadly enough, our hosting server got hacked with many thanks to the Turkish hacker who has nothing better to do with his time then put his mind to destructive use. Grrrr....

On a brighter note, it is giving me an opportunity to give a facelift and increase security so it's onward and upward from here on out!

I just ran across a very interesting article about Grocery Pricing that was published at Bankrate.com

For those who are avid couponers, can't seem to beat the system or want to figure out how to beat the grocery stores at their own game (and don't we all!), this article sheds light on grocery pricing and I found it very interesting.

Thanks to it's author and Bankrate.com for sharing. Enjoy and happy shopping and saving!

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Take grocery coupons to the next level
By Jay McDonald of Bankrate.com


Have you hit a wall with grocery coupons? Is chasing after bargains from store to store costing more in time and gas than it's worth, even for frugal folks?


Knowing how grocers deal out savings through four pricing strategies can help you reach the next level of savings.

"It's an age of transparency now. Consumers now have more weapons than they have ever had," says Venkatesh Shankar, professor of marketing at the Mays Business School at Texas A&M University in College Station, Texas.

"Once you see the value proposition you are getting out of your stores, you can determine which retailers best meet your needs."

“Consumers now have more weapons than they have ever had.”

Grocery stores comprise a more than $500 billion industry in the U.S., according to U.S. Census figures. Not surprisingly, there is fierce competition for a pie that large. As a result, profit margins are razor-thin.

Grocers use pricing strategies to make ends meet. These pricing models -- deployed over tens of thousands of items in a typical supermarket -- allow retailers to offer just enough in discounts without giving away the store.

4 pricing strategies - The four major grocery pricing strategies are:

High-low: Popular with savvy bargain hunters who save by stocking up, these supermarkets offer deep markdowns on some items. Typically, high-low grocers offer an enticing array of weekly grocery coupons, promotions, buy-one-get-one-free, or BOGO, offers and special discounts for loyalty-card holders. The grocers recoup their lost profits by charging slightly higher margins on other items. High-low grocers also typically charge vendors for warehousing, shelf space and promotional displays. High-low chains include Kroger, Publix, Safeway and Winn-Dixie.

Everyday low prices: Popular with price-sensitive shoppers, EDLP retailers negotiate rock-bottom wholesale prices from their vendors in lieu of charging fees. They then pass on the savings to customers. EDLP chains include Walmart, Target, Food Lion and Lucky.

Discount clubs: Discount clubs
make their profits from membership fees and reduced overhead. As a result, their markup is usually half that of supermarkets. Their warehouse stores typically stock a small fraction of a supermarket's inventory (1,500 items or so) and package it in large quantities to maximize the savings to members. Discount clubs include Costco, BJ's Wholesale Club and Sam's Club.


Aggressive pricing: Although these retailers generally carry fewer than 1,000 items, they specialize in selling name-brand products packaged to sell at attractive prices. Aggressive pricing stores include Dollar General, Family Dollar and Dollar Tree.

Each pricing strategy offers bargains for shoppers willing to put in the work, says Neil Stern, a senior partner at McMillanDoolittle LLP, a retail consulting firm in Chicago.

Read the rest of the article online here:
http://www.bankrate.com/finance/personal-finance/take-grocery-coupons-to-the-next-level-1.aspx

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