Grocery Flyers and Price Pulsing: An Analysis. Louis Shalako.

Louis Shalako.

Grocery flyers and price pulsing. I've been studying the grocery flyers for some time now.

Over time, there appears to be some rather minimal changes and substitutions, and yet the same items appear again and again. All they do is change the price, after a while, we realize that there is no fixed price for the item, for example broccoli crowns. One week, $0.88, next week, $1.88, next week, $1.48. This item is almost never sold at its alleged regular price.

Oddly enough, I have never seen Romaine lettuce on sale, and that is especially true in winter when the price always goes up. Fuck, last year, I did not buy lettuce for months, not when a head of iceberg hit $4.98. One factor is planning: these promotions aren't figured out the morning the flyers actually come out, they are planned weeks, perhaps many weeks in advance. Planners have access to information we don't. Certain products tend more to seasonality, and other forms of volatility. Yet you can sort of bet on the 'futures' price of a tin of beans or soup, crackers and other shelf-stable products. You order a planned amount, for delivery to the stores in time, taking into account anticipated response for each promotion, and all of that is paid in prices that fluctuate, quite a bit in the present climate.

Buy low, sell high, right? Price-pulsing is a bit like jigging, ladies and gentlemen, in which you jig the bait, up and down, hoping to get a nibble in the case of fishing, or just hoping to get the customer into the store for a few perceived 'bargains'. This is true of almost any form of retail, duh, forgive my stating the obvious.

#analysis

If you contracted for ten thousand tons of broccoli crowns at a set price, you know what your costs are. Over time, price pulsing determines an average sale price, presumably enough to present some profit. 

You also know just how much of that stuff is sitting in a warehouse somewhere, and how long it’s been there, and in what condition.

You might want to slash prices just to get it out of there.

Today's broccoli crowns: $1.98, theoretically, regular price about two-fifty or even two ninety-eight. You can also go across town to a more prestigious grocery chain store and pay a lot more. What’s interesting is that some big corporations have two or three or more chain operations. The pricing is all over the place, and yet it all comes from the same warehouses or the Ontario Food Terminal.

Two weeks ago, Schneider's chicken wings were on promotion. They're back again this week, same price. So, on promotion for a week, one week at regular price, back on promotion.

If they never promoted this product, they would be able to reduce the regular price by a significant amount.

#analysis

According to the grocery receipt, I saved six dollars on chicken wings. So you get ten wings, a small packet of sauce, regular price $14.99. Which is ludicrous.

(What was almost worse--the very strong smell of shit in the back of the store. This was not some secret fart person being sneaky and having a bit of fun. This was more like changing the baby's diapers in a small, enclosed space. Quite frankly, I almost puked.)

#food_basics

You sort of have to pity the staff at a time like that.

That smell wafted a couple of hundred feet across the back of the store, and part way up several aisles in the vicinity...

Okay. If chicken wings are $8.99 for one week, back up to $14.99 for one week, back to $8.99 for one week, and then we finish up the month at $14.99 again. So, that's roughly thirty dollars plus eighteen dollars if you bought one each week. Divide forty-eight by four. You could sell the wings for twelve dollars, never promote them and make exactly the same money. But then, you have nothing to put in the flyer, nothing to rant and rave about in your radio commercials.

#analysis

It really is a game, and it’s important to know how such things work. Personally, I simply cannot afford ten wings and sauce for $14.99. And the fact is, I bought five other items, all of them at the ‘regular’ price.

As the game is currently constituted, you sort of have to read the flyers and never buy anything you don't have to at the regular price. That being said, they could save a lot of money on paper and ink, forget updating the online flyer once a week and save something on labour--would the competition eat them alive? Possibly not, if your 'regular' prices consistently beat everybody else's.

Or, how long would it take for word get around about your 'no-bullshit' pricing? At least you get a few radio commercials out of it...

That, as we say, is a question for another day.

 

END

 

Thank you for reading.

Image: the Toronto Star. 

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Note: The story was originally just stuff I posted on Facebook. The highlighted stuff comes from the comments I added on. I do not know how to fix that.