Approximately 80 percent of U.S. households have supermarket frequent-shopper cards. Supermarket shoppers enjoy seeing messages at the bottom of their register tapes like "Your Card Savings $19.33." But are they being lulled into a false sense of savings? Does the use of a club card assure shoppers of the lowest grocery bill?
Katy McLaughlin, a reporter for The Wall Street Journal, recently went supermarket shopping in five cities to find out whether consumers using frequent-shopper cards were paying less for their groceries than shoppers at stores that do not have cards. The cities were Chicago, Dallas, Atlanta, San Francisco and Brooklyn, N.Y. At each store she used the same 20-item shopping list that included items like coffee and detergent. Most of them were not card specials. She also purchased five additional "impulse" items that were card specials, which should have given the club-card supermarkets an edge.
Shopping at a Safeway in San Francisco, she paid $66.17, and her register tape said that she had saved $18.02 using the Safeway Club Card. McLaughlin then shopped at an independent grocer, Cal-Mart, a no-card store, and paid $62.66. The no-card store was $4.80 less costly in Chicago. The difference in Brooklyn, N.Y., was less than a dollar. In Dallas, she saved $4.46 at a no-card Super Target compared to an Albertsons.
What happened? Why did it cost this reporter less to shop her list at the no-card stores? The Journal's story concluded that the regular-priced items at the no-card stores tended to be less expensive than at the stores that offered the cards.
This is no surprise to me. Operating a club program is costly for these supermarkets. Those expenses must be made up somewhere, usually in higher prices on regular-priced items. This is similar to supermarkets offering double coupons. A supermarket that offers double coupons for any length of time usually increases its prices to make up for it.
Another reason why the no-card supermarkets showed well was some of the same items that were offered as card specials were also on sale at the no-card stores. Grocery sale price savings are funded by the manufacturers as part of their marketing campaigns offered to all supermarkets.
Predictably, supermarkets with frequent-shopper cards tell me that 25 items is not a fair test. And, they say, price is not the only thing that shoppers consider in deciding where to buy their groceries: service, selection, convenience, cleanliness and short checkout lines also matter. And these are good points.
The Journal's story was titled "The Discount Cards That Don't Save You Money." Unfortunately, the story missed the mark because the card programs do save money, often a lot of money, for smart shoppers. The Journal's reporter did not start out with a shopping list that was purposely created to take advantage of the supermarkets' card specials. That is not the way readers like Alan Martell of Delmar, N.Y., shop for groceries.
On a shopping expedition at Price Chopper, the purchases on Alan's well-planned shopping list totaled $188.50. He used the Price Chopper Advantage card to whack $56.94 off the total, and double coupons (up to $1) to reduce the bill by another $74. Carefully planning a shopping adventure to make the most of card savings is an important part of playing the great grocery game.
Ways to save
I have another problem with the Journal's story. In concluding that the club cards are not money-savers, the Journal's reporter failed to recognize that many shoppers have more than one club card. Reporter McLaughlin did not take into account that, in today's troubled economy, smart shoppers like my readers are willing to "cherry-pick" the best card specials at several supermarkets and then fill in other items at whichever store has the lowest prices, card or no card.
One of the reasons why most of the supermarket industry has embraced frequent-shopper programs is the belief that the cards promote the loyalty of their best customers, and fewer sales are lost to the likes of Wal-Mart Supercenters. Now, let's consider what happened when the Journal's reporter did her comparison shopping in Atlanta. Atlanta is a very competitive grocery market. When McLaughlin shopped her list at a Kroger store, her total was the lowest of any card program store, $48.89. However, the comparison with an Atlanta Wal-Mart Supercenter was an eye-opener. While admittedly, a few of the brands and sizes on her list were not available at Wal-Mart and she had to substitute, the total was a skinny $34.70.
Supermarkets that thought their card programs would make them competitive with Wal-Mart's low prices are learning a lesson the hard way. The added costs of the program are making the price disparity even more obvious.
United Feature Syndicate