July 27, 2002 Method The Data Analysis Conclusion
Albuquerque, NM More Observations Back to NO CARDS! Contents
Thirty-two months have elapsed since I last undertook a
grocery store price comparison in Albuquerque. It's taken about
that long to recover from my previous MILES OF AISLES Supermarket
Pricing Survey adventure, but this time around my job was easier.
I had my Shopping List ready to go, 25 common items I had priced
and compared in '99. Wouldn't it be fun to see how much that same
group of items would cost today, at those same stores? Well, here
you go -- have fun!
Total Price of 25 Common Grocery Items
Store Nov. 1999 July 2002 % Change
Brooks $52.59 $53.00 .78%
Furrs w/card* $47.84 $53.59 12.02%
Furrs Reg./Lowes $54.56 $53.59 -1.78%
Raleys $50.83 $54.07 6.37%
Smiths w/card $52.35 $55.63 6.27%
AVERAGE $52.01 $57.53 10.61%
Albertsons $50.19 $63.16 25.84%
Smiths Reg. $55.70 $65.71 17.97%
* The Furrs store has been converted to a no-cards Lowes; Lowes
7/02 total is compared to Furrs 11/99 w/card & regular price totals.
Background: We've certainly seen some interesting developments
in the 'store wars' since my original price survey. At that time
we had two card schemes operating here, the Furrs "Extreme
Savings" and Smiths "Fresh Values" programs. A third program at
the Lucky chain (formerly Jewel; the name seems to have been
changed solely to allow introduction of the cards) had existed
briefly from August 1998 until June of 1999. Then Lucky stores
were sold to Albertsons, which subsequently sold the markets or
converted them to card-free Albertsons stores. (Albertsons,
interestingly, having staked their reputation on being a card-free
store, did not discontinue card programs at the chains they
acquired, and has recently launched new card programs under the
Albertsons banner in several states.)
At the time of the Albertsons merger, New Mexico also got the card-
free Raleys chain. By November of 1999 I was able to survey prices
at 5 stores within a five mile radius of my home; between the 3
card-free stores and the 2 card stores I analyzed 7 sets of prices.
Then, early in 2001, in our own little mini ENRON scandal, Furrs
went bankrupt! A local corporation of long standing, with 5,000
employees and 70 stores in New Mexico and West Texas, the state's
biggest privately own company, Furrs also happened to be the first
store in NM to try a card program. Much was made of the bankruptcy
(the preceding statistics come from the Alb. Journal, 2/8/01,
"Furrs files for Chapter 11 bankruptcy"), but there was nary a peep
about the role shopper cards may have played in Furrs financial
troubles.
Fragments of the gutted Furrs corporation went to a Texas company,
Lowes, and they re-opened some of the old stores under that name,
without a card program. This leaves us with but one card program,
Smiths Fresh Values card. Top of Page
Method: ON ANY GIVEN DAY. This day was July 27, 2002. If an item
was on special, that's the price I included in my total (though I
did make a note that it was called a special). In the case of
Smiths I noted the card price and the non-cardholder prices as if
I were going to shop for my 25 items twice, once with and once
without the card. The main thing was consistency -- from store to
store I tried not to diverge from the brands on my list, and never
diverged from the size or the quantity (usually 1 each) of the
items noted. Quantity was significant in the case of Albertsons
and their 'bonus buy' stickers, which sometimes gave the price as
$5 (for example) 'when you buy 2' (at least it was clearly stated)
with no discount offered on a single item. At other stores,
specials were offered as '2 for $5' (for example) and really did
mean '1 for $2.50' as I made a point of clarifying with a worker at
Lowes.
ON ANY GIVEN DAY. To be as fair as possible, you almost have to go
to all the stores in one day. Prices are in a constant state of
flux, special offers change frequently. Even if you make a day of
it, there are many opportunities for error. The tags can be
confusing, products or tags can be misplaced on the shelf, or the
tags might be hard to locate or illegible... not to mention that my
eyesight isn't what it used to be. I admit, I am fallible. I am
one person with a pencil and a list printed out from the computer.
These are the pitfalls of embarking on an informal study of grocery
store prices. On any given day, this same set of items might be
priced completely differently.
The numbers fluctuate, yet the results are surprisingly consistent.
Aren't you curious?
On any given day in your town, which of your local stores will
give you the best deal on these 25 items? Shopping List
Analyzing the Results: For my 1999 price survey I was most
interested in comparing the stores' prices to each other and the
'special' card prices to the so-called 'regular' prices at the card
stores. This time around I was also eager to compare each store's
1999 prices to today's prices. Let's look at those numbers again:
Total of 25 Items Nov. 1999 July 2002 %Increase
Brooks $52.59 $53.00 .78%
Furrs card/Lowes $47.84 $53.59 12.02%
Furrs Reg./Lowes $54.56 $53.59 -1.78%
Raleys $50.83 $54.07 6.37%
Smiths card $52.35 $55.63 6.27%
AVERAGE $52.01 $57.53 10.61%
Albertsons $50.19 $63.16 25.84%
Smiths Reg. $55.70 $65.71 17.97%
How interesting. Brooks, that modest independent grocer around
the corner, the store I fled to when the cards came to town, has
increased prices less than 1%; while Albertsons which has slowly
(and slyly) been shifting to loyalty cards, has increased prices by
over 25%!
Worth noting here is that according to the American Institute
for Economic Research, the cost of living factor for that period,
based on the Consumer Price Index, is only 1.07383. According to
their on-line Calculator $52.00 worth of groceries in 1999 (that
was the average of 7 price totals) should be worth $55.84
today. But look at what the average of today's survey actually
comes to: $57.53. Now look again-- 4 sets of prices did come in
under the Consumer Price Index, as we'd expect in NM with its
relatively low cost of living. But 2 sets of prices are so
inflated they have raised our average.
Not at all surprising is that the highest cumulative price for
those 25 items is the without-card price at our one remaining card
store, Smiths. Smiths 'regular' price came in highest last time
too, but today the price you pay for not using a card is over 200%
above the penalty for shopping without a card in 1999.
Total of 25 Items Nov. 1999 July 2002 Difference
Smiths card $52.35 $55.63 $3.35
Smiths Reg. $55.70 $65.71 $10.08
Will you look at that -- Smiths 'special' Fresh Values card price
today is within pennies of their 'regular' price of 1999, yet right
in line with today's Consumer Price Index. This supports two
points that card foes have been making right along:
A) In a two-tiered pricing scheme, the lower price is what the
'regular' price used to be, and the higher price is inflated.
B) Every true mark-down offered is more than offset by mark-ups on
other items.
The fact is that what Smiths calls a 'value' today is still higher
than the no-card totals at Raleys, Lowes and Brooks, while their
'regular' prices look highly, and I mean highly, irregular. And it
gets worse over time, as shown by the chart above. Let me
reiterate: That $10.08 difference between using the Smiths card or
not does not represent more savings to the 'loyal' customer, it
represents more penalties to those who don't comply.
It is worth noting here that the Brooks chain was featured in a
recent edition of the Albuquerque Journal's Business Outlook ("The
Old-Fashioned Way" by Diane Velasco, 7/18/02). Apparently Brooks
has survived and prospered throughout our local grocery store wars,
opening four new stores in eight months -- while still managing to
keep prices down and customer satisfaction up. No surprise there;
I personally have grown to love this store, and appreciate it all
the more after my tour of its competitors this afternoon.
Really, there were not many surprises for me on my survey of the
stores today. Common sense tells me, as it has from the beginning,
that,
1) The card programs increase operating costs and so must naturally
increase prices at the stores which have them.
2) The two-tiered pricing system invites abuse, as one price is
inflated to create the illusion that the other is 'special'.
3) Misrepresenting inflated prices as 'regular' will eventually
condition the public to accept or at least expect higher prices,
encouraging all grocery prices to creep (and sometimes leap)
upward. Top of Page
To put it simply: LOYALTY CARD PROGRAMS RAISE GROCERY PRICES.
More Observations: Plugging today's numbers into my spreadsheets,
I was mainly struck by how obvious the price hikes are. And I was
amazed, in hindsight, at how busy Smiths had been this afternoon.
In a field of 5 stores within just a few miles of each other, 3 were
less expensive than Smith's, and they were cleaner and tidier too.
Why are my neighbors flocking to this store? Perhaps they are just
doing their grocery shopping as a sideline to renting videos, banking,
getting photos developed, etc. and price never was the deciding
factor in where they shopped. Perhaps they have been taken in
by the hype and totally confused by the multiple sets of prices. One
thing I have noticed about shopper card stores -- they seem less
and less interested in the business of selling food and more into
hype, gimmicks, and the trade in valuable customer information.
2002 Award for Most Blatantly Manipulative Pricing: This has to go
to Albertsons, where half a dozen flavors of Ritz crackers were
marked $3.69 for a one pound box. I crawled along the floor (why
were so many of these popular items so often located on the bottom
shelf?) observing the tags until I finally came to the plain Ritz
crackers, one pound box. $5.79? They've got to be kidding! But
no, they weren't. Right next to the overpriced box of Ritz
crackers, I found the Albertson's brand of a similar looking
cracker, one pound box for-- Go ahead and guess. $3.69. "Compare
and Save" the sign said. The Albertsons brand was also intrusive
in the frozen vegetable aisle. This was the only store at which I
failed to find either Birdseye or Green Giant frozen broccoli. The
Albertsons version of the product was of course cheaper but I
penciled it in. As mentioned above, I was tough on them when it
came to the 'when you buy 2' deals, so I gave them a break on
broccoli. Over all, I found Albertsons to have the most confusing
and oppressive specials. Are they laying the foundation for a new
card program here? I wouldn't be surprised. They've already
raised the prices.
Empty Promises. We have shown that shopper cards have not
fulfilled their promise of lower prices for consumers. I wonder
whether they have fulfilled the promise of higher profits for the
stores. The downfall of Furrs suggests they have not. The truth
is, when I checked prices in 1999, I found that the Furrs Extreme
Savings program did offer real savings, even 3 years after
inception. Cardholders were getting lower prices in exchange for
letting their purchases be tracked. But apparently Furrs couldn't
afford to be so generous. As I have noted elsewhere, they began
placing more limits and conditions on their specials over time,
could not keep their shelves stocked, and eventually folded --
after 70 years in business! Maybe they were in trouble before they
brought in the cards -- but the cards surely didn't save them. I
personally shifted hundreds of dollars of spending per year to
other stores when the cards came in. Top of Page
In conclusion, I will say that on this day is Albuquerque, a smart
shopper could certainly pay less for these 25 items, though she
might have to pay more to do so (that is, stock up on the sale items)
or accept a different brand; and she'll certainly go to more stores.
Stretching the grocery dollar is still an art requiring preparation
and perseverance. "Loyalty" has never served the consumer well,
and folks are saving money today the way they always have, by
knowing their prices and shopping at a variety of stores.
You would think the stores would want to woo customers with better
service and a more pleasant, efficient shopping experience--
especially if they know their prices are not competitive. Instead
we get the insult and inconvenience of an ID card, while outrageous
and manipulative pricing complete with misleading claims of so-called
savings. Perhaps the idea is to make our shopping experience
such a hassle that we won't have the strength to trek to the other
stores. We certainly won't have any energy left over for protesting
and complaining about supermarket practices... Or will we?
It's time to fight back. Let's do a little surveillance for our-
selves. The stores are providing us with such marvelously detailed
receipts, we should all be saving them, checking them, comparing
them, and periodically pooling them to create our own 'profiles' of
the stores and their pricing habits. If you are shopping at a card
store under duress, you can still contribute to the cause by saving
receipts and monitoring prices. For more ideas on how to fight
the cards and keep the stores honest, visit C.A.S.P.I.A.N.
Consumers Against Supermarket Privacy Invasion.
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