Monday, 4 July 2011

The " save money " illusion !

Many older people will have a quiet chuckle at Woolworths announcement that they will freeze the price of apples, tomatoes, carrots, onions and potatoes for a year - and Cole's plan to reduce their house brand bread to one dollar a loaf.

They will remember the time - about sixty years ago - when the manufacturers controlled the price of what they produced - and therefore the price of grocery items was the same at the corner store as at the larger food shops.

Then came the " supermarket " concept - and with it the need to wheel a trolley around the shelves instead of being served at the counter.   The inducement was unheard of low prices - for some items !

The marketing people added psychology to their bag of tricks.  Pick several popular items and slash the price to cost - or even sell them way below cost - and make up the loss by adding a few cents to every other item in the store.

And that's where we are today !    Some very clever people sit at the pricing computers and work in tandem with the advertising gurus to devise the " bait " which gets people into the stores - and convinces them that they are getting " bargains ".    What actually counts is how well this strategy delivers a profitable bottom line to appease the shareholders.

About eighty percent of grocery purchases occur in the stores of just two major players in Australia.

Don't ever think they are in business just for the financial health of their customers !

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