At my local Coles last Sunday evening, I was struck by the number of “3 for 2″ or “4 for 3″ offers being made. That is, if you buy four of a particular item, you pay the same as for three. This kind of thing certainly isn’t new, but it seems that almost all the specials in the store were of this type.
In other supermarket news, unit pricing has been rolled out in the local Coles and Safeway. That is, just about every product line in the shop now has a second label telling you the price per 100 grams, or 100 millilitres. These tags are supposed to make it easier to compare the price between different-size bottles from different (or the same) brands, and thus let people choose the cheapest if they so desire. It’s fairly standard Economics 101 – make the market more transparent and it’s supposed to work more efficiently.
But, of course, a “4 for 3 special” means that the unit price on the sticker on the shelf no longer applies and means the shopper is back to a bit of mental arithmetic. Am I being paranoid, or is this not entirely coincidental? And if so, what’s in it for the supermarkets?
Multiple buy promotions are usually put on products that either have a short shelf life (food products mainly) or require a high turnover to maintain low unit costs (Soft drinks, canned food for example) so if anything supermarkets are just tying an incentive on to consumers that matches their need to move particular stock lines quickly.
I have on occasion seen the modified unit price of a product on a multiple buy special, but not always. As for the who wins? well that’s an easy one, Coles and Woolworths will win. They can use their position as monopoly players to extract better deals from suppliers, and then proceed to water down those benefits to the customers and they get to use the “Special” pricing marketing on their ads and on the shelves, which has a tendency to override the value of unit pricing which of course allows them to move stock of higher value without heavy discounting.
Of course tactics like this would be irrelevant if unit pricing was law, then even sale tickets would have the unit price on them (in a good version of that law anyway), but were not there yet.
PinkyOz
I think you’re right – it’s a way to put the maths back into price comparisons. I expect to see a lot more of it, and probably more creatively (buy two of these, get one of those free; Hopefully also “buy 11, get 3 free”). Hmm, perhaps some creative cross-collecting will be the next step – “buy any 2 litres of Barf ice-cream and 1kg of Snarf preserved fruit for only $19.99″.
Buy 3 for 2 only saves you money if you were going to buy 3 all along… but methinks their aim is to make people buy more than they would have otherwise.
Unit pricing is still mental arithmetic if the units aren’t equivalent. I’ve seen units expressed in grams vs. kilograms, milleliters vs. liters – sure, it’s all divide/multiply by 10/100, but who’s going to spend time pondering the price points in a busy, crowded supermarket, getting their shins banged by trolleys manned by other harried consumers? I’d bet most people respond to perceived savings rather than work out what’s really a bargain, so those 4-for-3 deals are a way to get a few cents over on shoppers.
I’m surprised unit pricing isn’t mandatory. Back in the U.S. in the late ’60’s, early ’70’s, you could buy mechanical calculators to work out savings, before electronic calculators ran on batteries and were small enough to carry, and they were very popular. Soon enough thereafter, households in some regions held “grocery strikes”, ultimately leading to a Congressional investigation, and unit pricing was soon ubiquitous.
Getting people to ’stock up’ when they wouldn’t normally bother is the point of those offers, yes. Not really about math, more about shifting product in volume. Its a handy way to get rid of stuff that isn’t moving.
I don’t mind it as applied to non-perishables, but doing it to fresh stuff can potentially create a lot of waste.
Grumphy: I get that. But it seemed to me (and it’s possible that there’s some confirmation bias going on here) that there’s a lot more such offers in the shops at the moment than in the past.
I can’t help wondering whether the simultaneous introduction of unit pricing had something to do with it.
When I was retrenched in 1993 I was house husband for a while and used my idle mind to research living better for less stategies. Buying up big when specials were on was certainly a good way to cut back the average shopping bill. However, in some cases, the special was for food that had passed its prime or would go off if not used quickly. In other cases buying up big merely meant that we consumed more instead of reducing our average spending on item X.
Shops use specials to move items that are approaching their use by date as well as a strstegy to entice people into shops. My observation would be that specials, including 3 for the price of 2 are almost always clear bargains.
Think of specials as a way of helping people on low incomes at the expense of those who are more concerned about saving time than saving costs.
Maybe it’s the other way around, Robert. Because there’s unit pricing on the shelves you’re noticing the n for m specials more.
Mental arithmetic is good for you!
I once went to a hardware store and bought 10 large screws when I only needed 8 and the girl on the cash register *still* couldn’t figure out what the price should be
I also often create havoc by giving the cashier $32.50 when the price is $27.50 and stuff like that. One even thought *I* was the crazy one, until I got my change.
Anybody who can’t mentally figure out the actual price in a 4 for 3 offer deserves to be ripped off. And I’m only really half joking when I say that!
Robert I noticed this at Coles yesterday, as well. I bought three bottles of soda water for the price of two! I reckon you are onto something here because those offers were all over the place and they may well be attempting to muddy the unit pricing process.
The introduction of extra petrol discount dockets, for a limited time, if you spend large amounts on groceries is also of interest. They are obviously keen for large volume sales, all of a sudden, with those with less to spend in one hit, subsidising the big spending gas guzzlers.
i noticwed it the other day too.
I’m with Peter on this. I calculate TP to the sheet. How many sheets to the roll, how many sheets to the package, how many sheets to the 3-for-2, how many sheets in the cheaper brand versus the softer nicer smelling sheet. A good sheet can make my day, so it is important.
I am very big on this. Does confuse people though. I see it as a sign of intelligence/solidarity/creativity etc when a retail person cottons on in a few seconds.
Maybe there’s a chance for a grassroots movement out there.Or a sekret signal for us Brass in Pocket minimisers.(mini misers?) – The secret signal could be to start singing “I’m special, so special, I gotta have some of your attention, give it to me”
glen/maxwell – ah the old TP puzzle – not only unit price but thickness, softness, strength, smell, pretty pussycat type designs and the big one – width – not all dunny rolls are the same width. A larger width inhibits free rolling on the holder and, one might argue scientifically, does not add an extra dimension to the ultimate usage. .
Minimum brass in pocket is great, especially for cyclists who are already avoiding most of the useless junk that people lug about, so we really notice the extra grams. Well, some of us do… my partner has a 10kg pannier “handbag” that’s always got $20 or so of coins in it (plus all the other handbag stuff).
Some register watchers have trouble even with the obvious stuff, like making $15 change when they have no $10 notes. But the greek lady in the bakery where I buy lunch… does it in her head most of the time or uses paper and pencil.
Oh, the supermarkets absolutely depend on innumeracy. Consider the latest offer – spend $300 and get 40c a litre of a tankful of petrol.
At 50l a tank (allowing that not all tanks will be fully empty) that’s a 6.7% discount. But it’s got great publicity and people are flocking to spend more than $300 – which a “6.7% off all stock” sale would not cause to happen.
And the supermarkets have probably managed to pass on some of the cost of the offer onto the oil companies anyway (not that my heart bleeds for them).
Multiple items price reductions hark back to the days of the old “Half Case Warehouses”, where bulk buying did produce some savings but gobbled up pantry storage space. Perhaps the entry of a new participant Costco in the Melbourne market has a bit to do with the sudden rush to produce “savings” for customers.
As some friends of mine are doing with the latest petrol offers, using the ability of a group of people to coordinate their shopping means the petrol tickets will be offered on a rotating basis to each person in the group. They have eight people so far which they calculate will produce roughly $1500-$1600 per week – producing at least five large reductions which will be ballotted, as well as the numbers of trolleys passing through the checkout to produce the benefit. They are hoping the offer remains open for some time as they plan the side benefits they see coming from a joint shopping trip – lunch, coffee, a way to keep in touch with friends.
I think they should do price discounts that appeal to magical thinking — buy 4 instead of 3, and it means you won’t be late for work again this week. Buy 5 instead of 3, and that cute girl at the skating rink really *does* like you.
Further to Greg’s comment about supermarket pricing in the USA, I noticed over in New York last year that supermarkets seem to be *disallowed* from doing ‘multiple buy’ discounts in the sense that, if they’re offering a “two for $5.00″ deal, they *must* let you pay only $2.50 if you only want to buy one.
For some reason in NYC the stores can’t force you to buy more than one of what you need, and they still have to charge you the promotional ‘multiple buy’ discount price for the lousy single item you are buying.
I was happy. Good deal for the consumer. We were a household of two in a tiny Manhattan apartment, so having to buy 6 packs of toilet paper to save 50c per unit was never on the cards for us…
I never looked into the history of it, but I suspect it was the result of some creative litigation by a consuemr group at some time in the murky past…
@6 yeah, I agree that its happening more, but I wonder if it isn’t also a response to people tightening their belts? I’ve noticed ACA et al have shifted their programming a little more towards ‘how to save/budget’ articles and a little less towards pursuing dodgy builders lately, too, and of course we have politicians urging us to spend for the sake of the world. Whether people are actually tightening their belts or not, there’s at least a perception floating around that spending needs encouragement.
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WRT the petrol discounts, watch what happens to the prices of other groceries as petrol discounts eat into profits…
Are these 3-for-2 specials Australia wide or just in Victoria (or even just Greater Melbourne)? I’ve noticed the abundance of them, too, in the local Coles. I thought it may have been a response to the recent ACA story about CostCo opening in Melbourne soon.
They were pretty prominent in Adelaide last weekend at Coles when I went, so I am guessing it is an Australia wide thing at the moment.
Mercurius: this is the case all over the US, not just NYC (thank god!). There’s still some cleverness on the part of the supermarket, in that they’ll usually have a price tag stating “2/$5.00, regular price $2.99″, so that only someone savvy enough to know the law would be aware that they could still buy a single item for $2.50. The end result is that most people (based on my very casual and not at all scientific observations) still buy two items and the supermarket gets to shift some stock, while those who know the law get to save a bit of money.
Australia doesn’t seem to have quite as strong consumer-advocacy the US does so I don’t know if there’s much hope of it ever happening, but it would be nice to have such a thing legislated in Aus too.
Mercurius: this is the case all over the US, not just NYC (thank god!). There’s still some cleverness on the part of the supermarket, in that they’ll usually have a price tag stating “2/$5.00, regular price $2.99″, so that only someone savvy enough to know the law would be aware that they could still buy a single item for $2.50. The end result is that most people (based on my very casual and not at all scientific observations) still buy two items and the supermarket gets to shift some stock, while those who know the law get to save a bit of money.
Australia doesn’t seem to have quite as strong consumer-advocacy the US does so I don’t know if there’s much hope of it ever happening, but it would be nice to have such a thing legislated in Aus too.
PS: Wanted to say great post!
Why would this be necessarily a *good* thing? Why shouldn’t a shop be allowed to charge what they like? Most people expect to get a price break if they buy several of the same items, so why not tinned food as well? How would this work with the warehouse type markets where you have to buy a whole case? How is buying *one* of something on special saving you money, when the next time you buy it, you have to pay the higher price?
Seems like some people here just can’t stop themselves – insisting they know better how things should be run.
I expect that a warehouse where the unit is a case would be fine – they don’t allow sub-case purchases at all. It’s equivalent to the supermarket not allowing me to buy one biscuit out of a packet.
But I think that rule is silly anyway. The whole point of bulk purchases is that you get the price break and the supermarket trades future single sales for big sales now. Especially with stuff that is seasonally popular or unweildly – why do you think xmas wrapping paper goes on special a month before xmas? But they also do the same thing with stuff like fizzy water, there’s generally a bulk special a week or two before each holiday so people thinking ahead can buy early… the benefit to the supermarket is spreading the sales load.
There’s two different things going on here: the unit pricing is in response to pressure from the ACCC, and can be considered as part of the horse trading currently going on. You know, unit pricing in, grocery choice out.
The ‘buy 3 get one free’ type offers are there for one reason only – to get you to spend more money. If you’d normally buy two of an item that costs $5 for exmaple, you get tempted by this offer, spending $15 instead of your usual $10 and taking home 4 items over 3. “Bargain!”, you think.
From the shops perspective you’ve just spent $15 instead of your usual $10, a rather nice 50% increase. The fact that you took home 4 items is irrelevant, as the shop makes the same amount of money per item, and rips the ‘discount’ from the supplier when it comes time to settle in 90 days’(!) time.