Photo by rudlavibizon.
Though we might think that we have the freedom of choice when we shop at a supermarket, massive efforts have gone into making it more convenient and desirable for us to choose some products over others.
This post will discuss some typical behind the scenes supermarket tricks designed to expose us to a large number of high profit margin products, how shelf space (prime “real estate”) are brought and sold with slotting fees paid by food companies, and how these practices impact our health and our wallets.
There are approximately 320,000 edible products for sale in this country. Large supermarkets might display as many as 40,000 of these edible products. The corporations that own large supermarkets want us to do as much searching as we can tolerate in order to expose us to the largest possible number of items because products seen most sell best. They figured out how to get us to walk up and down those aisles for as long as possible, but not so long that we leave in frustration.
Supermarket tricks
Supermarkets are design with these fundamental concepts (all of which to get us to buy as much unhealthy food as possible):
1. Do not create gaps in the aisles.
Gaps will allow the customer to cross over to the next one. If the shopper escape mid-aisle, we might miss seeing half of the products along the route. Unless the aisles are so long that the customers complain, supermarkets do not like to have gaps.
2. Avoid using “islands” when displaying products.
These make customers bump into each other. This disrupt the flow of traffic. Supermarkets want the traffic slowly moving at all times/
3. Place store brands immediately to the right of high traffic items.
People read from left to right, so the name brand item will attract shoppers to the store brand items.
4. Display high profit, heavily advertised products at the ends of the aisles.
Products place at these locations are often brought on impulse.
I have a weakness for beverages place at the end of the aisles. I usually do not know that I need to buy that new brand of iced tea or bottled coffee drink until I see at the end of aisle with a large “sale” sign on it. Yeah, I am a sucker for that stuff. But then again, this means I am no longer on grocery duty, which is a good thing thing for me!
5. Place high profit, center aisle food items 60 inches above the floor.
This height can easily be seen by adults with or without glasses. Being only 62 inches tall, I rarely look higher (or lower) than that height.
6. Devote as much shelf space as possible to brands that generate frequent sales.
The more shelf space they occupy, the better they sell.
7. Near the entrance, place items that sell especially well based upon its enticing smell.
Upon entering a supermarket, customers always see or smell produce, flowers, or freshly baked bread in front of them or immediately to the side. The sights and yummy smells will keep us lingering and encourage more sales.
Off topic – some real estate agents also recommend baking cookies or lighting a scented candle before an open house so the yummy smell would encourage us to linger.
8. Place meat, produce, dairy, and frozen foods against the side or back walls.
These are often the items we get from a supermarket. By putting them as far away from the entrance as possible, shoppers have to walk through at least one aisle to get to them. But one aisle might makes all the difference because we might see something to buy on impulse.
9. Slow background music.
The slower the beat, the longer we will tarry.
10. Make the customer search for “loss leaders.”
The items we need most (like meat, coffee, or bananas) are often sold below or their actual cost. The longer we have to search for them, the more products we will see.
11. Offer samples.
If we like what we taste, we are likely to buy the product.
Slotting fees for shelf space (prime “real estate”)
Another way for supermarkets to make money is by “renting” prime shelf locations to companies whose products they sell. Product placements depends on a system of incentives (called “slotting fees”) that sound suspiciously like bribery. Food companies pay supermarkets for the shelf space they occupy at prime locations like the space near the cash register.
Supermarkets also demand that food companies buy local advertising for the products for which they pay slotting fees (trade allowances). This is a way for stores to cover the added costs of dealing with new products (shelving, tracking inventory, and removing new products that do not sell) since the 1980s.
How do all supermarket tricks and slotting fees impact us?
It is not a simple case of supply and demand when we go shopping for groceries in a supermarket. Supermarkets create demand by putting some products at prime locations where we cannot miss them. These products are often junk foods full of cheap, shelf stable ingredients like hydrogenated oils and corn sweeteners, made and promoted by giant food companies that can afford slotting fees, trade allowances, and advertising.
A previous post discussed the conflict of interest between supermarkets (which are in the business of selling as much food as possible to us) and the customer.
Any new product that comes into a store must come with guaranteed advertising, coupons, discounts, slotting fees, and other incentives.
This is why there are entire aisles pf prime supermarket real estate devoted to soft drinks, salty snacks, and sweetened breakfast cereal. Why do you think there is always candy next to cash registers?
Besides pushing us towards junk food, these practices impact our wallets with higher prices at the cash registers. In addition, since these “incentives” to supermarkets are “business expenses,” they are tax deductible for food companies.
Supermarkets argue that if we eat too much that is our problem. That is true. We should always take personal responsibility for what we are eating. But they are in the business of encouraging us to buy more food. When you have a good friend, raving about how good this new product taste each time you turn a corner at a supermarket, you will eventually grab a bag either to out of curiosity or just to shut them up.
Until next time and thanks for stopping by Small Steps to Health.
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{ 6 comments… read them below or add one }
Good post Asithi. I heard off a friend one other trick supermarkets used to try is to place the beer near the nappies. Why? Because apparently a lot of women send their husbands out to pick up nappies while they stay in the house and look after the baby. The man then gets to the supermarket for the nappies, sees the beer and you have an almost guaranteed impulse buy.
@Tom Parker – Nappies? This is the first time I heard of this term. I need to ask my husband about this since he grew up in England.
In England, do they label which country your produce come from? Apparently labeling country of origin for our produce is suppose to go into effect this October. I am wondering if that would influence how you would buy your produce.
Shopping on an empty stomach is dangerous for me. I wonder what the highest margin items are for supermarkets. Soda and alcohol has got to be high on the list.
@Scott – According to a Canadian government study*, the highest gross margin items are in-store bakeries, with 51.2%. Second are prepared foods, yielding a 50.3% gross margin.
The lowest profit margin item is milk. Milk is often priced as a loss leader since customers usually come in looking for this product.
For a restaurant, the highest profit margin is the drinks. I have family that owns a restaurant and they tell me that the fountain soda cost about 15 cents, but they charge $2.50 for each soda. And a lot of restaurants still do not offer free re-fills on their drinks.
Thanks for commenting Scott.
*Canada Agri-Food Trade Service, “Overview of the Retail Grocery Market in the U.S. Pacific Southwest”
(December, 1997)
Excellent post, very detailed. I also try and avoiid shopping on an empty stomach….it’s amazing the lengths they go to to try and get us to eat..well….crap
@Fitness – That is it! It is not always about making a conscious choice. When the marketers are manipulating what you think you need, it is not a simple matter of supply and demand.
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