Fake Savings – Grocery Store Loyalty Cards

Almost everyone I talk to about grocery store loyalty cards say that they save them a bunch of money. So how do you resolve this with a widely quoted article by Katy McLaughlin of The Wall Street Journal that was written Jan 21, 2003. According to the article, consumers generally spend more money by shopping at grocery stores with store loyalty cards than at stores that don’t use them.

Basically, the article had shoppers shop at a store using its discount card, and then went to a nearby store that didn’t have a card and bought the same items. The result? In all five comparisons (Dallas, Chicago, Brooklyn, Atlanta and San Francisco) the shoppers ended up spending less in the grocery stores that didn’t offer a discount card – in one case 29% less.

I think that supermarket loyalty cards breed a “Fake Savings” that can cost you a lot of money. Because you see all this money being discounted at the register when you use the loyalty card, there is an automatic assumption that you are saving a lot of money. As the WSJ article shows, this may not be the case.

To know if you are truly getting a deal, you really need to begin a Grocery Price Book. By relying on this rather than what looks like a good deal according to the stores, you’ll know when you have saved money and when you are being deceived. Grocery stores are out to get you to spend as much money as possible so it’s your responsibility to understand when a price is a good deal and when it’s merely fake savings.

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