WHY a Store can be Cheaper is the Question

• Tweet
• Sharebar

• Tweet

I’m sure you all have your own favorite places to shop, especially for groceries. Your store may by close to you, or have all the kinds of special foods you want. Hopefully, your favorite grocery store is the cheapest option overall that you’ve found. But how did you determine which store is the cheapest?

Many people look at the deals a store has when they first move to a given area, check all the other local stores, and just use whichever one is cheapest at the time for what they are shopping for. Basically, they are checking to see which store has the best deals. But, in my opinion, they are looking at it totally the wrong way.

For one thing, the sales a store has, especially grocery stores, are constantly changing. Just because the item you were looking for one day was cheaper at your favorite store than any of the competition, doesn’t mean the store’s average per item price is any cheaper. Sales are designed to get you into the store, and once you’re in, you are more likely to buy more than just the sale items that caught your eye.

If you want to determine which grocery store is the cheapest, or any store for that matter, you need to ask the question WHY a store is cheaper. Now this may seem like an odd thing to ask. How could you ever know enough about a grocery store to know why it is going to be cheaper on average than another?

It’s actually much more simple than you would think. Simply look at what the grocery store has to pay for besides the food it stocks. For instance, does the store have an enormous amount of staff? Are they a part of a national chain with lot’s of corporate overhead? Do they take credit cards? How much do they advertise? What advertising methods do they use?

One of my favorite grocery stores locally is Winco. They always seem to have the lowest prices on pretty much everything. One of the main things that helped me determine why they can keep their prices lower is that they don’t take credit cards. Credit card companies charge businesses typically between 1 and 3 percent of all transactions. That expense gets put back on the consumers in the form of higher prices over all. So by shopping at Winco, I like to think that I save around 2% on my food for that reason alone. Winco also has a huge bulk section. Because they are buying food from their distributors in massive bulk and you have to bag the food yourself, you save on packaging costs for things like dry beans and nuts. Winco also doesn’t advertise at all from what I’ve seen, so you aren’t paying to put their logo on a billboard.

For those small reasons and a few others, I was able to determine that Winco is able to save at least several percent on it’s costs compared to other local grocery stores, savings which seem to translate pretty well down to the consumer.

To see if my theory was correct, I did some comparison shopping between Winco and Albertson’s, which is another very popular store in Boise (there are two of them within three miles of each other here, which I find to be ridiculous, and which probably doesn’t help keep their costs low). My list consisted of all of the main staples of my diet, although I left out some foods that would have been slightly redundant, like pinto beans and red peppers when black beans and green peppers were already on the list. As you can see, I don’t eat any sort of processed food or wheat, and all my staples are raw food I cook myself. You can read more about why I do that here. All the below prices are in dollars per pound, except where noted.

One Can Black Beans
Dry Black Beans
Brown Rice
Lentils
Raw Almonds
Rolled Oats
Fuji Apples
Tomatoes
Red Onion
Carrots
Green Peppers (each)
Jalapeno Peppers
Potatoes
Sirloin Steak
Chicken Breast
Pork Tenderloin
Skim Milk Gallon
One Dozen Eggs

Total

0.78
0.99
0.79
0.89
3.99
0.57
0.98
1.58
0.78
0.44
0.78
1.58
0.39
3.28
1.99
3.99
2.25
1.38

$27.43

1.79
2.99
1.75
2.19
7.49
1.49
.88*
1.49
1.29
0.89
1.99
1.49
0.49
4.99
1.97*
4.99
3.09
2.09

40.50

*These items were on sale

As you can see, the prices were pretty obviously skewed in Winco’s favor. In fact, if you bought all of these items together, the total for Albertson’s would be $40.50, while Winco’s would be only $27.43. That’s a difference of almost 48 PERCENT! As much as Albertson’s loves to claim they have low prices, and flash advertisements claiming huge percentages off, on average Winco not only is cheaper, it’s absurdly cheaper. Assuming your diet is similar to mine, it would be stupid to shop at Albertson’s when you have a Winco near by!

There are several other important things I noted here as well. One thing was the “sales” Albertsons’s had. For instance, fuji apples were $0.10 cheaper per pound there than at Winco when I did my shopping. They were also the front item displayed in the produce section. But if you look beyond that front sale, you’ll notice that Winco won every other produce item, and in the case of the carrots it was by more than 100%. Another section with greater disparity was the dried foods, like the beans, lentils, and rice. The differences were enormous, and I think that that could be attributed to the bulk food system that Winco uses that I mentioned earlier.

Now, not everyone has a Winco, and grocery shopping isn’t the only errand you’re going to run in the near future, so how does the common consumer determine the why behind a store’s low prices? It’s as simple as asking a few questions:

• Does the store advertise? If so, through what means?
• Does the store accept credit cards? Does it take only certain types of cards?
• Does the store have any sort of membership program?
• Does the store have more staff compared to other stores in its niche?
• Is the store part of a franchise?

If you look at the answers to those questions for all of the stores you want to compare, it’ll probably become pretty obvious which stores are going to have the lowest prices on average. If you want to make absolute certain of it, simply do some comparison shopping like I did. Just walk around with a notepad or tablet and jot down prices on all of the things you think you’ll be buying, and find out which store has the better average prices on any given day.

Of course, grocery stores aren’t the only category that you can look at with this method to determine who is going to have the cheapest overall prices. In fact, you can use it for most types of stores. Another great example that I have is Costco. They don’t spend money advertising, they only accept one type of credit card, and their membership system means people who shop there heavily, like myself, get a better deal than those who don’t. I buy clothing, electronics, food, and all sorts of other miscellaneous stuff there. Probably 95% of the shopping I do (which isn’t very much I guess) is done at Winco or Costco in order to save money, and I’ve noticed the products I get are almost always higher quality than anywhere else.

So next time you are getting ready to go shopping, ask yourself why you go to the store you shop at. And more importantly, why that store has the lowest prices you’ve found. They may not be as low as you thought.