Supermarket Strategy

With the cost of food still too high let's review supermarket strategy to separate you from your money. Although the high prices are not, in this case, the fault of the supermarket.

Our governments are raising interest rates, in an effort to control inflation. This slows the economy down by making borrowing more expensive. But banks are in the business of loaning money and this strategy can be harmful. As of this writing two banks in California and Switzerland's best-known bank have had to be rescued.

Governments are raising interest rates to control inflation but workers are demanding pay raises to keep up with inflation. It is pay raises, without a corresponding increase in production, that does so much to drive inflation.

Products must be transported to the stores so when the price of fuel gets high it makes everything else expensive. Diesel fuel is really expensive now. The issue is not a shortage of oil but a shortage of refinery capacity. But with all the discussion about electric vehicles on the horizon, why would oil companies invest in building new refineries?

A major reason for the increase in prices is that we are becoming more of a service economy, due to the retirement of the Baby Boomers and the work of taking care of them. In a service economy both wages and prices tend to be higher than if the vast majority of workers were engaged in actually making something. We saw this in "Demographics And Economics" December 2022.

But even so, supermarkets are trying to get as much money as possible out of us.

The local supermarket exists to provide food and other daily products for the community that it serves. Thus, we could say that the market has a harmonious relationship with the surrounding community.

But when a shopper enters the supermarket, an adversarial relationship forms on a deeper level. The goal of most shoppers is to obtain the sought for items from the supermarket for as little money as possible. The goal of the owners and managers of the supermarket are just the opposite, they wants the shopper to leave behind as much money as possible on the shopping trip.

I am really impressed with the planning and strategy that have obviously gone into the design of supermarkets to achieve their goals in this underlying competition with the shoppers. I notice that almost always, a cafe where customers can get freshly cooked food to eat there will be near the entrance to the supermarket, if the store has a cafe or take-out.

I believe that this is not so much to draw shoppers away from their shopping to eat there, but for the scent of delicious cooked food that it provides. It is well-known that shoppers spend more, on average, if they shop when hungry. The in-store cafe near the entrance to the store is to stimulate hunger by the scent and sight of cooked food.

Also near the entrance to the store will be the produce section. It would seem to make sense to locate produce next to the frozen aisle because most produce remains fresh for longer if kept cool. The reason it is not done that way is strategy.

The sight of green vegetables has a relaxing and refreshing effect on people. Somewhat like taking a break from the stress of the city by a walk in the park. I notice that even though we know that people do not eat enough vegetables, the stores usually take great pains to make an abundance of crisp green leaves very visible to shoppers passing through the produce section near the beginning of the store.

If the store sells flowers or house plants, those will nearly always be located near to the entrance to the store for the same reason. The whole idea of this is to get shoppers to relax and let their guards down a little, without realizing it, before moving on to the rest of the supermarket.

Now that the store has done what it can to get shoppers softened up and ready to spend, we come to the most important zone in the store's strategic plan, the impulse zone. I have noticed that as soon as shoppers are "prepped" by the produce section and in-store cafe, they move into a zone that is stacked with those products, mostly food, that customers are most likely to buy impulsively. It is important to have the impulse zone not too far from the beginning of the store so that shoppers have not yet begun to worry about how much money they are spending.

In this zone, shoppers are surrounded by appealing products that are not too expensive and are quick and easy to prepare and eat. This is also the zone in which people are most likely to buy things that they do not really need, which is what the store's owners want them to do. This could be referred to as the store's "inner impulse zone" or "impulse zone A".

As we move beyond this zone in a large supermarket, we move into another impulse zone stacked with products that are a little less impulsive than the first part of the impulse zone. This is where canned foods are likely to be located. There is still some impulse factor in the purchase of these goods, but they are more difficult to open, prepare and, eat than those, mostly boxed, products in the inner impulse zone. I notice that goods located in the outer impulse zone usually require some kind of cooking or baking before eating, while those in the inner impulse zone usually do not.

There are usually some "special impulse displays" located around the impulse zone area. These will be counters with products such as imported cheeses. Comparison shoppers would usually not buy such products because local mass-produced cheese is so much less expensive. The store tries to use visual appeal and location to get shoppers to buy. It also helps if such displays are located close to the scent of the in-store cafe and, of course, must be located not too far from the entrance to the store so customers encounter the display before they become concerned about how much money they are spending.

Next comes what I will call the "central zone". This is a non-strategic section that contains specialty products that are usually not bought impulsively such as beauty products and vitamins. If the store has a pharmacy, it will usually be in the central zone that is not part of the store's impulse strategy. Specialty books and magazines are usually located in this zone. School supplies may also be found here.

After the central zone comes what I will call the "utility zone". By this point in the store, shoppers may have begun to worry about how much money they are spending. This zone contains non-food products that are rarely bought on impulse such as detergents, garbage bags, pet supplies, paper towels and, automotive products. Toys may also be found here, although I am certain that stores evaluate the proportion of their shoppers who bring children shopping and if it is high enough, will place toys closer to the impulse zone.

The rest of the store consists of what I have termed "staple zones". These zones sell food staples such as meats, fish, bread and, dairy products. One reason that staple zones are kept separate from the rest of the store is that impulse is much less a factor here. Staples are products that people are going to buy anyway. Shoppers do not buy milk and eggs impulsively but will buy a certain amount of them regardless.

But always notice that exceptional products, such as expensive imported cheeses, are kept far away from the dairy aisle in the impulse zone. So is bottled, ready-to-drink milk. In my local store, I once noticed that small bottles of milk, located in a cooler near the impulse zone, cost more than the two liter cartons in the dairy aisle.

There is one important exception to staple zones that I notice. It is products such as salt, sugar, coffee and, tea. These are usually mixed into the impulse zone. At first, this may seem unusual because these are staples and probably not too impulse-oriented. But then it becomes clear that these compact staple products, which are bought by almost all shoppers, serve to draw people into the impulse zone without taking up too much valuable shelf space. If those staples are on a shopper's list, it means that the shopper cannot avoid passing through the impulse zone.

The frozen aisle is not actually a staple zone since it contains a wide variety of products. The reason that it is almost always located in the non-strategic second half of the store is that the storage and preparation requirements of frozen foods make impulse-buying much less of a factor.

Supermarket planners must know that there is a very big difference between the first and second halves of a store. In the first, shoppers feel more refreshed and have not yet developed concern about how much money they are spending. In the second half, some may have grown tired and many have begun to worry about how much they are spending. I cannot recall ever being in a supermarket that is not built around this principle.

Now we come to the checkouts. We find ourselves suddenly back in the impulse zone. In fact the checkout aisles, the final part of the shopping trip, is the most intensive impulse zone in the store.

Store planners must consider a checkout aisle like a vise, a final chance to squeeze as much money as possible out of the shopper. Notice that general interest magazines and tabloids are rarely located in the book and magazine section, they are almost always there to pique your interest during the few minutes in the checkout aisle. On the other side of you is a wall of candy. Don't those Reese's Peanut Butter Cups bring back delicious childhood memories? How can you not buy some?

Finally, we notice that the newspaper rack is almost invariably located away from the main part of the store. This is self-explantory, newspapers help to draw people to the store but do not provide much profit margin and would be a distraction from the impulse zone.