An analysis of Supermarket Pricing

Does it matter which supermarket you shop for groceries? Does it make a difference which week of the month you shop? These were questions raised by an Extension County Family and Consumer Science Advisory Committee. Participants expressed the belief that supermarkets raise their prices and feature more junk food the first of the month when food stamps are distributed and have more specials on basic foods at the end of the month, when many low income people are out of money. This study was conducted to test these assumptions and to identify shopping strategies to maximize grocery budgets.

This study evolved into two phases. In the first part, a shopping list of 130 items was compiled. Items on the list were divided into 17 categories. They represented basic items most homes would purchase during a month. Expanded Food and Nutrition Education Program (EFNEP) educators made sure the list included items frequently purchased by their low income clientele. The categories were: fresh produce, meats, canned foods, soups, cereals, beverages, starches, staples, chips, cookies, condiments, cake mixes, breads, dairy, frozen foods, paper goods and miscellaneous.

Volunteers were recruited to do the shopping. Each volunteer went to a different store and recorded the price for each item on the survey list. The shopping list specified package size and brand. For comparison purposes pre-determined sizes of the product and some name brands were used rather than trying to determine the best buy each time. Volunteers were asked to find the least expensive brand for a few items. The volunteers gathered data twice a month for three months, January through March 1995, during the first and last full week of each month.

The eight stores visited for the study represented major supermarkets in Guernsey and Belmont counties of Ohio. Both of these counties are rural, located in the Appalachian area of eastern Ohio. One discount grocery was originally included but discontinued because they did not carry all the items on the shopping list or did not maintain the same brands on a consistent basis.

The researchers also looked for foods featured on the front page of the stores' advertising flyers since those are the ones most likely to catch a reader's eye. Food groups represented and the total number of items in each ad were noted.

In phase two the stores were surveyed weekly in April to track pricing trends. Six stores were surveyed for the 32 most commonly used items carried in all stores. One of the weeks included a holiday (Easter). The weekly survey was repeated with four stores in July when the holiday fell in a different week.

Evaluating three months of advertisements, volunteers found that the number of foods featured varied weekly within the store and from store-to-store. Items featured were not always offered at reduced prices, that is, deli trays at holidays and lamb at Easter.

A soft drink was on special almost every week in nearly every store. This was not always listed in the flyer. Each week Pepsi or Coke was featured somewhere. Coke was the most likely product to be featured, followed by Pepsi, then store brands and 7-Up.

Stores offered something from most food groups on the front page of their flyers each week. Milk was the least featured food group. While each store tended to featured a meat item on the front page, the stores varied as to the number of meat items in the ad. One store offered only one meat item while another store always had five or six. Each store featured something classified as a junk food (soft drinks, chips, sweets), but normally this would be just one or two items, a minority of the featured items.

In the store price surveys, 60% of the time the highest priced week was one of the middle two weeks of the month. The first week of the month was the least expensive 7 out of 13 weeks, but the most expensive 2 out of 13 weeks. (See Table A.)

When comparing the weekly cost variation of the total shopping list within a store, no pattern was identified. None of the stores had one week that was consistently their highest priced or their lowest priced. However, the prices did fluctuate from week-to-week within a store. During April the difference between the highest and lowest week ranged from 83 cents in Store B to $6.03 in Store F. In July prices fluctuated more in three of the four stores, ranging from a difference of $2.27 to $4.28. (See Table 1)

At the beginning of the study, committee members and volunteers felt that one store in the area (Store A) always had the lower prices. This caused concern in the one county, because that store was located outside the county and meant a 50 mile round trip to take advantage of its prices. The study showed that during the month of April this store had the lowest total shopping bill 3 out of the 4 weeks and the lowest average price for the month. But in July, they were the highest priced one week and the lowest only one week. In addition, their average price for the total shopping list was slightly higher than the lowest store. In July the average price of three of the four stores only varied 50 cents and the difference in the average prices of the lowest and highest priced store was only 83 cents. (See Table 1)

When comparing prices between stores, each store in the survey had a product at the lowest price sometime during the survey period. Although a store may have a higher total cost it may offer the best price on some items. One store consistently had the lowest prices for cereals, another tended to be lowest on starch products. The store with the highest overall market basket price had the lowest prices on frozen foods.

Even though overall prices were high during holiday weeks, some of the specials near the holidays were excellent. Consumers may want to watch their other purchases during holiday weeks.

If a consumer shopped all four stores during the week of July 3 and bought each product at its least expensive, the list would have cost $37.97. This would be a savings of $4.60 to $7.03 over shopping just one store. But to shop the four stores the shopper would have to travel a thirty-mile circle in Belmont county or 50 miles in Guernsey county. At a mileage rate of .27 cents per mile (IRS mileage rate for 1995), it would cost the consumer $8.10 to $13.00 in transportation costs to shop all four stores. This does not include the value of personal time and the expense of impulse buying in additional stores.

Researchers compared the costs of convenience foods versus the basic ingredient. Fresh potatoes were compared to a national brand scalloped potatoes mix. Ten pound bags of potatoes was less expensive at the first of the month while the 7.25 ounce box of scalloped potatoes tended to be less expensive at the end of the month. Of course, the fresh potatoes would make many more servings. Whole chicken and chicken leg quarter prices were also compared. Chicken leg quarters were less expensive more often throughout the month.

During the data collection, volunteers began to notice that the price of some foods marked as "special" was the same as the price in weeks when it was not on special. Therefore, 4th of July sale flyers from three of the supermarkets were collected and items featured were added to the shopping list for that store and tracked for the entire month. Most of the featured specials really were specially priced. Five out of 14 special prices were matched again that month. Prices of four of the specials were 50% or more lower than the next lowest price. Nine of the items cost double the sale price sometime during the month. This trend may not hold for all holiday specials. It did not appear that deli trays offered for New Years or the lamb at Easter were featured at any cost savings, but they were not part of the survey. This could be a topic for future study. There were numerous cases where advertised in-store specials were actually at their regular price. So before shopping specials, consumers need to know what the regular price is. (See Table 2)

As Extension educators we often teach consumers to make shopping lists based on sale flyers and to look for the lowest prices. This study has caused the researchers to re-think some of the traditional advice we have been giving.

Based on this study our recommendations to consumers are:

• Know regular prices. Compare the regular and advertised prices or in-store specials. Are they really specials?

• Be flexible with menu plans. Make substitutions to take advantage of sales.

• Budget to allow purchase of extra supplies (non perishables) when an item is really a bargain. Limit or avoid purchasing when the price is higher.

• Store selection is less important than knowing when the price is reasonable.

• Compare prices in flyers and ads but do not assume that one store is always less expensive on all things. Even stores that have high average total prices still have some items at the lowest or best price. Also, just because a store may be known for featuring one type of item doesn't mean that their price is lower than other stores.

• Consider transportation costs in store selection and to determine the number of places to shop. Limit shopping to one store each week unless additional outlets are nearby or shopping is combined with other travel costs.

No clear patterns of pricing were evident in this study, either between stores or within a store. Therefore, we come back to the recommendation above, in order to realize any saving in the grocery store consumers must know prices and have the flexibility to purchase an item or pass it up.