Surprisingly, a trip to the movie theater reminded me of a great lesson that can save you money in the grocery store.

Approaching the movie theater concession stand I decided to order my usual medium bucket of buttered popcorn (yeah I realize that movie popcorn is not the most frugal purchase but we all splurge once in a while).

That’s when the cashier asked, “would you like to upgrade to a large bucket of popcorn for only 50 cents more?”

Well I almost jumped at the chance. For only 50 cents more I could skip my usual medium size bucket and get the larger bucket of popcorn. Sounded like a great deal. No frugal minded person would refuse, would they?

But then I thought about it a fraction longer – I was by myself and I never even finish a medium size bucket.

Yes, the larger bucket of popcorn was the better deal but for me it wasn’t the better value because at the end of the movie all that extra popcorn would be sitting uneaten at the bottom of the bucket – essentially 50 cents wasted!

The Best Deal May Not Present the Best Value for Your Family

Its surprising how often this same scenario plays itself out at the supermarket – but the cost is often much greater than a mere 50 cents.

It frequently happens in one of two instances:

We notice that the larger or bulk size package is cheaper on a per unit basis than the smaller size package. In the shopping cart goes the bulk size purchase.

We find a great sale! Wanting to be frugal and maximize the savings we buy extra quantities in order to stock up.

These moves frequently turn out to be great money saving strategies.

Yet, ever so often we realize that a frugal deal is not so frugal if we end up wasting what we’ve bought. In fact, a recent study found that we throw away nearly 14% of all the food we purchase.

Your “Savings” May Be Going to Waste

Let me give you the perfect example. I love bananas and whenever I see a really good sale I can’t help but to buy two or more bunches. Yet, what inevitably happens is that some of the bananas get eaten but most just sit around the kitchen where they eventually turn brown and mushy. Days later they are simply thrown away. Any perceived savings from the sale are now down the drain.

The large one gallon container of milk was my natural choice. It seemed so much cheaper than the half gallon or pint sized containers. The half empty spoiled containers of milk in the fridge, however, finally convinced me that the more expensive (per unit) half gallon cartons of milk were actually the better value because milk didn’t go to waste. Likewise, I’ve since stopped stocking up on bagged lettuce that’s on sale only to see the extra bags wilt in my refrigerator crisper.

To Find Out If You’re Getting the Best Value Check Your Trash Can

So how do you tell if your bulk sized purchases or the practice of stocking up on items during a sale is a money wasting or a money saving move? Simply do a trash can audit. Just check to see what items you’re throwing away on a consistent basis.

Find yourself throwing out those extra large bags of carrots or tossing that 20 pound bag of potatoes that sprouted roots, then you may want to avoid bulk purchases of these items.

Notice that you’re discarding a lot of half eaten value-size containers of yogurt. It may be time to settle for the slightly more expensive regular size containers.

By examining our trash and what we throw away, we can avoid the “sale” and “bulk size portion” spending traps. What are some of the bulk purchase mistakes you’ve made? Do you have tips for determining when its better to buy in bulk or stock up on sale items? We’d love to hear from you. Leave a comment below.

A recent post by Myscha Theriault at the personal finance blog Wisebread.com got me thinking about our “friendly” local grocery stores. 

In the article she discusses things that frustrate us all about our local supermarket. Particularly how supermarkets will:

Dramatically increase the price on a favorite item.

Change the location of an item in the supermarket so it becomes difficult to find.

Stop carrying some of your favorite items for seemingly no reason at all.

I can totally relate to this article because I’ve had the very same gripes on several of my shopping trips. 

The simple fact is that supermarkets really have no interest in making our lives more convenient. 

Yeah they say they do. They advertise their friendly atmosphere, vast product selection, and super low prices. But the real truth of the matter is that your friendly supermarket is a big business whose sole existence for being is to make a profit, not to make our lives any easier.

In fact, your convenience gets in the way of their profits. Making things more convenient for the shopper directly interferes with them making more money. 

Let me explain. 

If your grocery store was truly concerned with making things more convenient for you they would place the basic staple items you need closer to the entrance. 

This convenience would allow us to quickly grab what we needed and go.  But how many times have you gone into the store for a quick trip to buy some butter or bag of sugar and come out with a cart full of groceries? 

Supermarkets purposefully place the essential staples not at the front of the store, but far in the back. As a result, we pass through row upon row of edible temptations. In fact, nearly 40% to 50% of all of our purchases inside the store are impulse purchases! 

If your supermarket made it convenient for you by placing all of the staples at the front of the store, they would lose all the profit they collect as you make your way to the back to purchase your essential items. 

If your grocery store was truly concerned with making things more convenient for you they would place the items we use together near each other.   

Why are the hot dogs on one end of the store and hot dog buns on the other end, the salad greens in one place while the the salad dressing sits in another?

Well it again relates to the issue above. By making us travel across the store to get the buns for our hot dogs we’re more inclined to make impulse purchases, spend more money, and increase the store’s profits. 

If your grocery store was truly concerned with making things more convenient for you they would keep sales items in stock. 

Lets consider the super cheap “loss leaders” that supermarkets use to lure us into the store. The simple fact is that if you don’t get to the store during the first two days of the sale the sale items are frequently out of stock.  But to make it convenient for us by keeping store shelves fully stocked of sale items would cost the supermarket profits. 

Many of these super cheap sales items are sold at a loss to the supermarket (ie the term “loss leader”). Their only purpose is to lure you into the store. Once a customer is in the store there is not much of an incentive to stock a product the store loses money on. 

If your grocery store was truly concerned with making things more convenient for you they would keep check out lines short. 

Long check-out lines. Why does it seem that grocery stores have some magical formula where the number of check-out lanes left open is directly proportional to the number of people in the store so that even at 11pm we are kept waiting in a check-out line?

Simply put, long check-out lines create a captive audience more likely to purchase that candy bar, bag of chips, or magazine sitting right in front of us. In fact, per square foot, the check-out area is one of the most profitable locations in the entire store!

If your grocery store was truly concerned with making things more convenient for you they would keep sale prices simple. 

As I mentioned in my last post, supermarkets make sale pricing unnecessarily complicated – 3 for $7, buy 2 get 1 free, 4 for $7. Determining the individual price of a sale item is like taking a 5th grade math test.  

Grocery stores have discovered that we simply spend more when prices are advertised this way. With a 3 for $7 sale, for instance, its often easier for us to just place 3 items in our shopping basket than divide 7 by 3 to determine the individual price of a sales item. 

They don’t want you to easily figure out the sale prices of  individual items … you might realize you’re not getting a great deal after all.

The take home lesson: Supermarkets are in the business of making money.  Making things more convenient for us costs them potential profits. And let me be clear there is nothing wrong with a business wanting to make money. We live in a capitalist society.

The key is for us to realize this so that we keep more money in our pockets. By understanding supermarket tricks and tactics we simply save more.

Update: We’d like to thank Counting My Pennies for including this article in the Carnival of Pecuniary Delights personal finance blog carnival.

Unknown to many, grocery stores are one the largest living laboratories around. Unfortunately, we are the mice and the large corporate supermarket chains are the investigators.

Every single inch of your local friendly supermarket has been tested and re-tested to achieve the maximum amount of profit for the supermarket – from the color of the floor to the size of the sales signs, from the placement of the produce to the placement of food on the store shelves. Every aspect of your grocery store’s layout has been arranged to get you to spend more.

So effective is your supermarket that its estimated that nearly 40 to 50% of your grocery store purchases are impulse buys – items you had no intention of purchasing when you first entered the store. Yet grocery stores aren’t resting on their laurels. They are now using an ever increasing number of ways to gather and analyze shopper data.

Those store circular coupons and small loyalty cards attached to your keychain are literal gold mines of information. Supermarkets know what you buy, when you buy it, and how much you’re willing to pay for everything you buy.

Smile You’re on Candid Camera.

Now many supermarkets are going a step beyond in their collection of shopper data. That security camera used to catch shop lifters may be tracking your every shopping behavior – tracking what products you buy, how you determine which products to purchase, and what type of shopping pattern you use to cover the store during your shopping trip.

A company called VideoMining has even developed a complete store tracking system utilizing video camera information to help retailers analyze your shopping behavior. According to the company website, their video tracking system helps retailers in the following way:

“Understanding the motivations behind customer shopping behavior is the key to influencing their buying patterns. VideoMining TSP provides the stage for efficiently evaluating the effects of product placement, product assortment and cross merchandising changes and bolsters the development of strategies and tactics that lead to increased sales. For example, understanding trip patterns provides clues for ideal placement for impulse items and displays.”

The company has even patented technology that measures the emotional response of shoppers to products on the store shelf. All of this information only makes it easier for supermarkets to design their stores in a way that manipulates us into buying even more than we need.

• In what ways can a marketing display be altered in order to attract more shoppers?
• What is the optimal location to place a product in a store so that the greatest percentage of people purchase it?
• How does changing the signage on a product create more impulse purchases?

These are just some of the thousands of questions stores can ask and test with video tracking technology.

So what do you think about being part of the new high tech laboratory known as your supermarket? How do you feel knowing that you’re every shopping move could be recorded and analyzed on video camera? Let us know by leaving a comment below.

Dominick’s is one of the major grocery chains here in Chicago. I may be naive, but I thought that if I went into one Dominick’s supermarket in the Chicago area that I would pay the same price for a jug of milk, or bag of apples, or box of cookies as I would at any other Dominick’s store.

Apparently, I was wrong.

It seems that grocery stores owned by the same chain frequently charge one price in one neighborhood but a different price in others.

Some supermarket chains are worse than others. According to the consumer organization checkbook.org, a 12% price difference existed between the price of a test basket of groceries at the highest priced and lowest priced Chicago-land Dominick’s stores. Generally prices in the suburbs were more expensive than those within the city limits.

For a family that spends $150 a week on groceries this could mean a yearly difference of nearly $936!

Why does a grocery chain charge one price at one location but a different price someplace else?

• Perhaps rent in one area is much more expensive than another.
• Maybe differences in business taxes in different locations explain the need to charge different prices.
• Perhaps competiton from ethnic grocers or deep discounters is more intense within the city compared to the suburbs putting a downward pressure on prices at stores located within city limits.

All of these are viable reasons why you may pay one price at one location and a different price someplace else.

But maybe there’s another explanation.  Perhaps, supermarkets simple use all of the data they collect to determine what prices the market will bear at each location.

One person’s shopping patterns may not mean much, but multiply this by 10, 100, 1000 customers daily and the game definitely tilts in the grocery store’s favor. They know exactly what we buy, how much we buy and how much we’re willing to pay.

Unfortunately, we hand this information over to them each and  every time we use our loyalty cards – those small pieces of plastic on our keychains and  in our wallets.

But do we really have a choice?  Without using a supermarket loyalty card you can easily pay 20 to 30% more than the person next to you!   The simple irony is that by using our loyalty cards to take advantage of  sale prices, we ultimately provide supermarkets with the very information they need to determine what prices shoppers are willing to bear.

I don’t pretend to know for sure if loyalty card data is actually used to determine if customers in the suburbs will pay one price while those within the city are willing to pay a different price.   In the meantime however,  I’ ll continue using my loyalty card while trying to find the cheapest Dominick’s store close to me.

The other night I was in my local grocery store looking to buy some milk and other essentials. As I flew down the cereal aisle to get to the diary section, I stopped in my tracks noticing this strange looking price on a box of Kelloggs cereal.

I don’t know why I stopped to look but the price was just bugging me – $3.01 As I stood in the middle of the aisle I kept asking myself why $3.01? Wouldn’t $2.99 be more appropriate, or even $3? What’s with that extra penny?

Then it hit me. There was no particular reason for the extra penny in the $3.01 price. The store set the price at $3.01 to deliberately to cause me to do what I had done. To make me to stop in my tracks. Let me explain.

Every single space in your supermarket is designed to get you to buy. Grocery stores have mastered consumer psychology to get us to purchase items we never intended to. In fact, studies indicate that between 40-60% of all of our store purchase are impulse buys.

Grocery stores understand that we go into the store with a specific list, whether mental or physical, of the things we want to buy. We develop a sort of tunnel vision with our sights set on obtaining what we need.

Supermarkets look for every chance to break this tunnel vision. They want you to pay attention to something you didn’t have your mind on when you entered the store. They purposefully set out to distract you, to make you lose focus. Have you ever gone into a store for a few items and come out with a cart full of items? Then you know exactly how powerful this distraction can be.

Supermarkets have devised an impressive arsenal of ways to snap us out of our tunnel vision – to get us to pay attention to something we wouldn’t have thought of when we walked in.

The most common are sales items with phrases like “sale”, “bargain”, “special”. Yet, we can become immune even to these sales signs and stickers. Next tactic – small sales flags which stick out ever so slightly from the store shelf hoping to break your tunnel vision. If a consumer is immune to these sales tags, why not try plastering a product advertisement right on the supermarket floor. Shopper tunnel vision still not shattered, stores have stand alone displays in their arsenal. These small product containing displays jut out ever so slightly into our walking path causing us to take notice.

Now supermarkets seem to have added another tool into their arsenal. The price itself!

We are awash with prices ending in even numbers, or in 5’s, 7’s and 9’s. Think $1.99, $3.95, $ 4.95, 2 for $4, 3 for $10, $2.99, 3.49, $4.97, $5.95, or $2.00

Then along comes a price like $3.01. It just doesn’t fit into the normal pattern. It doesn’t want to seem to play along with the others. Like the girl with the punk hairdo and nose ring at the opera it begs to be noticed. And noticed it is. This is exactly what your supermarket wants you to do. They have interrupted your tunnel vision. They have temporarily taken your mind off of what you intended to buy.

So in the future it seems that we can expect more atypical prices. More $2.17, $4.01, $1.16, and $1.53s. Next time don’t try to figure out why they are priced that way. Take it for what it is, another in a long line of supermarket distractions designed to get you to buy more than you intended.

The Starbucks fix – the daily habit of enjoying our favorite Starbucks drink can cause serious damage to any budget. Financial gurus call it the “Latte Factor”, the way small daily charges add up to cause significant financial harm. Unfortunately, this Latte Factor doesn’t just apply to Starbucks.

Are you one who just can’t refuse a daily stop for your favorite Jamba Juice smoothies? Do Dunkin Donuts hot chocolates beacon daily? Are you an addict for a daily fix of Krispy Kreme donuts?

Just consider a $4.20 Starbucks drink purchased once a day will cost you $126 a month. That’s nearly $1529 a year! Add an overpriced $1.99 muffin to your tab and you’re looking at a total yearly bill of $2253! That daily Jamba Juice smoothie will set you back $118 a month, or $1432 a year!

So how do we keep our daily food cravings from damaging our financial health? The simple answer is to spend less at our favorite Starbucks, Krispy Kreme, or Jamba Juice. But this is easier said than done. Here are a few tricks to help out.

Cut the frequency, increase the enjoyment. A simple fact of life. The more frequently you partake of any experience, the less enjoyable each individual experience becomes. If we purchase our favorite Starbucks drink just once a week, that one drink would taste extremely delicious. But if we had that same drink with every single meal, we’d probably become downright sick of it (not to mention have one heck of a caffeine rush).

Imagine how much more enjoyable your favorite Starbucks latte or Jamba Juice smoothie would be if you had it just one time per week, compared to drinking it every day. While once a week Starbucks trips would probably take more will power than humanly possible, consider this alternative. Visit your favorite coffee shop every other day, instead of daily. The days you go without increase anticipation and make the days you do buy your favorite drink that much better.

Cut out the “accessories”. Do you always buy an overpriced blueberry muffin with your Starbucks latte? How about a donut with your Dunkin Donuts hot chocolate, or apple cinnamon pretzel stick with your daily Jamba Juice smoothie? By eliminating these “accessories” you can instantly cut your costs by a third or more.

Buy yourself a gift card. Most coffee shops, restaurants, and fast food places offer gift cards. Buy a gift card for yourself every month and limit your purchases to that one card. When the card runs out so does your Starbucks fun for the month. This does several things. First it forces you to stick to a Starbucks budget. Knowing you have a spending limit will help you ration your Starbucks spending.

Second, purchasing a gift card highlights the large sums of money you are actually spending on your drinking habit. Smaller amounts of money spent daily barely register. But when you have to lay out a large some of money to purchase your gift card, you’ll realize how much your habit is actually costing you. Paying $120 for a gift card has a much bigger psychological impact than does paying $4 a day for 30 days.

In no time at all you’ll get tired of spending a hundred or more dollars per month to satisfy your habit. By using a gift card you can slowly decrease how much money you spend. Simply reduce the value placed on your gift card each month. Start with $120 gift card. The next month buy a card worth only $100, and so on.

Employ the envelope system. This is very similar to the gift card method in that each and every month you set aside a certain amount of money that you’ll spend only on your Starbucks or Jamba Juice habit. Set this cash aside in an envelope. When the cash in the envelope is used up, your Starbucks habit is done for the month.

The envelope system does the exact same thing as the gift card system – it sets you on a budget and shocks you into realizing how much money you’re actually spending on your food habit.

By taking a few simple steps to gradually reduce your Starbucks habit, you can literally save hundreds of dollars each and every year.

Between 40% to 60% of our shopping purchases are impulse buys – purchases we had no intention of making when we first entered the grocery store. One of the most notorious impulse traps is the check-out counter.

Here grocery stores understand they have a captive audience as we patiently wait to pay for our purchases. It is here where they tempt us with a variety of candy bars, chips, and magazines.

Here are some simple ways to avoid these temptations and save money.

Candy and Snacks. Grocery stores place every variety of candy bars, peanuts, and potato chips right in front of our faces as we wait to check out. The best way to resist these temptations is to make sure you don’t go shopping hungry. Hungry shoppers are much more likely to grab a snack or two while in line.

Personally, I keep small snacks in my glove compartment. Usually gum, candy bars, chips, or energy bars that I’ve picked up at the local dollar store. Knowing that I have something to eat close by allows me to pass on supermarket temptations.

Magazines. Here is an especially subtle trap.  Why do grocery stores place magazines near the cash register? They simple understand that magazines are masters at creating riveting headlines that make people want to read the articles inside.

Hooked by a magazine cover headline, we start reading an article but of course don’t have enough time to finish. So what do we do? – we simply place the magazine with the rest of our purchases. Another $3.99 against our food budget.  If we buy just 2 magazines per week, we have just spent another $32 per month or nearly $415 per year!

To avoid the trap realize that most magazines have the very same articles posted on their websites for free! Get caught reading an article you can’t finish, simply go to the magazine’s website and finish reading it, without taking a bite out of your budget.

Alternatively, get a subscription to those magazines that continue to tempt you in line. While most magazines cost between $2.99 to $4.99, most magazine subscriptions can be purchased for $1 or less per issue. Common places to take advantage of cheap subscriptions include the magazine’s own website, Amazon.com, and websites like mags4cheap.com and magazines.com.

By taking simple steps to avoid check-out temptations, you can save literally hundreds of dollars per year.

We all love the thrill of getting a great deal. A sense of pride overwhelms us when we get 50% off a purchase. Yet, grocery stores have learned how to play this love for the deal against us.

They have conditioned us to expect a great bargain whenever we pick up an item that has a bright red sale sign in front of it. But as we’ll see this habit can be dangerous to our wallet.

Let’s take a look at a basket of goods that an average shopper might purchase:
shredded cheese, cookies, waffles, orange juice, syrup, cereal, ravioli, trash bags, and spaghetti.

All of these items were recently on sale at a suburban Chicago supermarket. Now if we take a closer look we see that we did indeed get a great deal on some of our products.

We saved between 44% – 50% on each of these items. Truly great deals. But lets take a look at some of the other sale items in our basket.

The savings now don’t look so great. Only 10% – 11% savings. The savings on the rest of the goods in our basket were even worse.

On these items we saved a measly 5% and quite frankly a 5% savings is hardly worth the effort.

The lesson …. Before you instinctively pick up a sale item, compare the sale price with the original price to see if you’re truly getting a great deal. If you can’t save at least 30%, put the “sale” item right back on the shelf.

Supermarkets have carefully refined their methods for making us spend more than we’d like. One of their most insidious money traps is the supermarket theme display. These displays usually take the form of tables, end aisles, or special shelves that display food items related around a central theme.

Theme displays are commonly focused around holidays, sports teams, and special events. A football theme display, for example, might contain table clothes and sign-age in your favorite team’s colors, along with items needed for watching the big game like a variety of chips, salsa, popcorn, sodas, and other party foods.

This may be one way the supermarket manager might envision the perfect theme display working:

Customer walking into store and spying a football theme display: H’mm I forgot the big Chicago – Green Bay game is this Sunday. Hey these chips are on sale, might as well pick up a pack or two for the crew. Well if I’m going to buy these chips on sale, might as well pick up salsa to go with them …… and while I’m at it why not pick up some drinks as well.

Let’s take a closer look at how such a theme displays brings in extra profits.

First, by drawing your attention to an event that may not have been on your mind, they can influence you into buying products you may not have originally intended on purchasing.

Second, An item within the theme display is often on sale thus adding “drawing power” to the display itself. Upon further inspection, however, this sale item may not really be much of a bargain, say discounted only 10% or 20% off its regular price. Alternatively, the sale item may represent a more expensive brand. A walk down the store aisle often reveals several cheaper brands.

Furthermore, the sale item in a theme display is often surrounded by complement products – products that are often bought in conjunction with the original. Salsa and chips in this example. Others examples include spaghetti and spaghetti sauce, crackers and cheese, or milk and cookies.

When you purchase the sale item you’re much more inclined to purchase its complement partner, especially if you feel that you’ve just gotten a deal on the sale item.

Even with the complement products, the grocery store can seize upon an opportunity to make additional profit, as many of these complement products are either brands with a higher profit margin or slow sellers that the store is looking to move off the shelves.

The best way to keep from losing money to supermarket theme displays is to avoid them all together. If you are tempted, just make a mental note of the items that interest you, then walk to the different sections of the store where these items are normally shelved. You’ll likely find cheaper brands of each item there, saving you money!

Supermarkets are marketing masters. They’ve studied your shopping behavior for decades.

As a result, they understand this simple fact – the longer a shopper stays in a store, the more that shopper will purchase. This explains why grocery stores have developed a variety of methods to keep you shopping longer.

Frozen Food Near the Back. Ever notice that the frozen food section is located farthest left of the store entrance? This is the last area most shoppers arrive at during the course of a normal shopping trip. If frozen foods were located near the beginning of your shopping path, you’d most likely speed through the rest of your grocery shopping before your items melted.

Where Have All the Clocks Gone? It seems that supermarkets have adopted some of the same techniques as casinos. Casinos, like supermarkets, have a vested interest in making sure you lose all sense of time, causing you to linger in the casino longer than you normally would.

This is why both casinos and supermarkets have no clocks on the their walls. Next time you’re in your local grocery store see how hard it is to actually find a clock.

Music to Slow You Down. We all know that music can affect our mood. But did you know it can also affect the way you shop? Certain types of music actually slow the heartbeat, put you in a relaxed mood, and consequently make you shop longer. Often we don’t even realize that the background music being piped into the store speaker system is having this effect on us.

Staples at the Corners. Have you ever gone into the store simply to get eggs and milk, then end up with a cart full of groceries? Supermarkets have purposefully designed it this way by placing basic staples such as bread, milk, and eggs at the farthest corners of the store. This forces you to walk past aisle upon aisle of tempting food products, dazzling promotions and “special” sales.

Worse yet, staples are hardly ever placed in proximity to each other but as far as way from each other as possible. Milk in one corner, bread in the far off opposite corner. This forces you to travel past even more aisles of temptations in order to get all the staples you need.

Aisle Speed Bumps. Grocery stores will do whatever it takes to slow you down. They know customers often have “tunnel-vision” going up and down aisles looking only for those items on their list. In order to interrupt this “tunnel vision” and slow down shoppers, grocery stores often place small stand-alone displays in their aisles.

These stand-alone displays jut out ever so slightly into the shopper’s path. Not only can these stand-alone displays physically offer some small impediment to a customer speeding down an aisle, but they also act as mental speed bumps promoting a product a consumer may have never even noticed before!

………… Avoid the Time Trap

How do you fight back and stop being sucked into a supermarket time warp? Remember, grocery stores know the longer you spend in the store, the more you’ll shop. First be vigilant about how much time you’re spending shopping.

Check your watch before you enter and periodically while you’re shopping. If you need to, set your watch or cellphone alarm to go off in 30 or 40 minutes.

Alternatively, shop with a list and stick to. Vow not to be tempted to deviate from your list. Consider buying your frozen foods first which will force you to speed up the rest of your shopping.

By understanding your supermarket’s time traps you can save money as well as your precious time.