A Savvy Tip: Understanding Loss Leaders & Sales Cycles

iamjustlu.com

I was so excited when JustLu asked me to do a guest post on her blog for Finance Month!  I must admit, I'm fairly new to the blogging world, as my blog, ASavvyLife, has only been around for about 6 months, so Lorene had to patiently walk me through how this all works :-)  So where have I been if I haven't been blogging all my life?  Couponing my guts out!  I started my career as a deal seeking maven in the LA area soon after graduating with a degree in Advertising from BYU.  With the cost of food, housing, and just breathing triple what I was used to, I quickly learned that couponing could be a significant way to contribute to our household "income".   3 kids later and a move back to Utah brought me fortuitously to www.SavvyShopperDeals.com where I am now known as The Savvy Shopper for the state of Utah.  I love my savvy life, as hectic as it may be, and am honored to help over 20,000 families save thousands of dollars a year on their grocery bills and hopefully help them develop a better hold on financial security in their lives.

As an avid couponer for the last 18 years, I employ a variety of savings strategies to boost my shopping power at the store.  Whether it's coupon matching, price point comparisons or multiple newspaper subscription purchases, saving money at the grocery store can certainly become a chore for many shoppers.  However, a few key insights in to how store sales are actually run can minimize shopping trips and maximize grocery budget savings!

One little understood ad tactic is called "Loss Leader Advertising."  At it's core, this is a simple method by which grocers and retailers alike, attempt to draw shoppers in to their stores on a weekly basis.  In basic terms, Loss Leaders are all items displayed on the front page of any grocery or retail sales flyer.  (Loss leader produce buys can also be found in the top section on the back page of grocery ads.)  These groceries or even clothing and other household products are drastically discounted in order to excite shoppers into running out to the store and saving big bucks!  In essence, these companies are trying to Lead you in to their store by taking a Loss on the products they're advertising.  They're not necessarily taking a loss in revenue for selling the products so cheap, though sometimes they are.  Typically, they just aren't making as much money as they normally would.  The goal in putting low cost items on the front page of an ad is to get shoppers into the store in the hopes they will buy the rest of their needed grocery items or other non-sale items while they're in the store scoring the advertised hot deals!  Basically, they want you to buy not only what's on page 1, but what's also on page 2, 3, 4 and even extra items not advertised.

However, Smart Shoppers stick with page 1!  (That's not to say that with a few great coupons you can't snag some amazing deals throughout the rest of the ad as well!!)  If you are just starting out in trying to build your food storage or trying to simply shop a little savvier, stick to page 1 of any sale ad and you'll be sure to stretch your budget a little further!

Secondly, it's important to understand how these loss leader sale items tie in to sale cycles and when you should stock up on products for your family!  Hot loss leader sales don't happen every once in a while, they happen every month.  And quite noticeably, the same product lines go on sale again and again, at approximately 3 month intervals.  Have you every noticed how often Betty Crocker Cake Mix or Quaker Oatmeal go on sale?  Did you know that almost every single item stocked at a grocery store goes on sale at least once every 3 months?  It's true!  That means, you should consider planning your grocery purchases to match these 3 month cycles.  You don't need to buy a years supply of Campbell's soup in one shopping trip especially if you don't have money in the budget to do so (unless it's a truly amazing sale of course ;-).  You can still fill the shelves in your pantry quite well by planning on making bulk buys in quarterly installments instead of all at once.  Sometimes this makes "stocking up" easier on the wallet!

Knowing how sales work is half the battle in winning big savings at the grocery store!  Shopping with your 2 year old who keeps screaming he needs a sucker is the other!