e-Course: Loss Leaders & Store Tactics

by Beth Montgomery on April 5, 2010 · 3 comments

in Coupons & Rebates, Tips & Basics

This is Part 4 of the 30-day Savings Soiree e-course by In Good Cents. View the most recent course in this series or head to the Saving Soiree e-course main menu.

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Welcome back!   We’re starting at the very beginning. We’ve talked a little about The Sales, but now it’s time to get a bit more detailed.

Everything about stores is designed to get you inside and spending money, that’s how they make a profit.   Knowing the store tactics can help you spot them and save you money!

- – Loss Leaders – -

The average person saves only 11% using coupons, but you hear about couponers always saving 60% or more.   So what’s the key?   It’s how you’re using those coupons.   And one big factor is loss leaders.

Loss leaders are how stores get you in the door. In fact, every store uses loss leaders, not just grocery stores.   Once you know about them, you’ll start to see them everywhere!   Matching coupons with loss leaders is how you can see some big savings.   However, simply buying loss leaders without a coupon is often a great value.

Loss Leader (noun): A popular product sold at a very low price or at a loss for the store for the purpose of attracting customers into the store.

That’s great, but how do you spot them?   Well, there’s a few characteristics of loss leaders that tend to help you.

The Staples
A product you buy regularly or that everyone needs often is a wonderful loss leader, because you’ll be aware of the regular price and be able to spot a wonderful sale price.

Examples:

  • Sugar
  • Bread
  • Toothpaste

Require Additional Purchases
Free cell phone anyone?   You’ll need to buy a plan and sign a contract!

Products that require additional purchases are wonderful loss leaders, because they guarantee you’ll be paying more money later.   Sometimes it’s a better deal just to keep buying the starter item and never purchase refills, if you can.

Examples:

  • Reusable Razors
  • Air Freshener Starter Kits
  • Cleaning Starter Kits or Refillable Bottles
  • Computer Printers

Quantities Limited or Perishables
Stores want to discouraging stockpiling on products that are sold extremely cheap, so they’ll often add quantities limited, no rain checks as a note on the sale.   They’ll make sure you can only walk out with a few at the wonderful price.

Another way they discourage this is to discount perishables.   Unless you’re all about freezer cooking and freezing foods, you may not know how to preserve fruits, dairy, and other items with shorts shelf lives.   If you walk out with too many, they’ll just expire and go to waste!

Examples

  • Diapers
  • Paper Towels & Toilet Paper
  • Fruits & Vegetables
  • Cheese

Inconveniently Located
Of course if you can walk in and grab the loss leader, then head right back out, you wouldn’t get to see everything else the store has to offer.   Therefore, stores often place these products, so that you’ll have to walk by many other products just to get what you came there to buy.   They hope you’ll impulse shop and grab a few more items while you’re there.

Examples:

  • Soda
  • Milk

- – Store Tactics – -

And while we’re on the subject of inconveniently located foods, stores also set up their entire design based on how consumers shop!. In fact, stores have many tactics to entice you into the stores.

Store Layout
Oh yes, the store is set up with brilliance.   The items you need most often are located at all corners of the store, making sure you walk all the way through and see everything else the store has to offer.   Notice how you never find milk, bread, and toothpaste together!

But there’s more to it than that.   The bakery is often located near the front, so that your sense of smell will kick in and get your tummy rumbling.   My advice, don’t shop hungry!

Product Positioning & Design
And of course, there are the products.

  • Packaging: Packages are getting bigger and brighter, but when you open them up, they look half empty.   That’s on purpose, so you think you get more for your money.   It’s all about that unit price, so figure it out!
  • Location: Stores place the most expensive items at eye level in aisles, while sale and clearance is on end caps to entice you down the aisles themselves.
  • Check-Out: Products found at checkout lines are often marked up and vary greatly, in hopes that you’ll impulse buy one or two.   There’s always something for everyone ” small tool kits, pocket cookbooks, toys, magazines, and candy.

- – Tips for Combating Store Tactics – -

  • Stick to your list and avoid impulse buying
  • Don’t shop hungry!
  • Calculate unit prices on products
  • Keep a grocery price book to track prices and find trends
  • Look at the top and bottom of shelves to find the cheapest products

- – Additional Resources from Previous Posts – -

Confused or want more help? Don’t forget that I teach classes and speak in the Central Indiana area! Use the code ClippingMyBudget to get $10 off a public class.

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