Hello all. Welcome to my Wednesday guest blog post from Rambler5319. Enjoy!
I’m going to start off referring to a recent article in one of national daily papers, by journalist Tom Utley, here in the UK. It highlighted a very cunning ploy being used by four of the big supermarkets. (I was taken in by it just as he was.) It’s called “Brand Matching” by the one he uses – Sainsburys; it’s called “Price Promise” by Tesco and other things by the others. It means that each supermarket in this scheme (Tesco, Asda, Sainsbury’s and Morrisons) finds out what the others are selling, say, their 500g packet of Shreddies for and if it is cheaper somewhere else they take the cheapest price and “match” it by giving you a voucher for the difference. For example, if you paid £4.18 for your carton of 48 Weetabix this week at Tesco - btw that is the price - and Sainsbury were selling theirs for say £4.00, and that was the cheapest of the other prices, you would have a credit for £0.18 and so on for all your other items. Some of these may be over or under the cheapest price so there will be a final balance which could be a plus or a minus figure. Just suppose in this case that the final total of plusses and minusses came to +£0.18 you would get a voucher for that amount. This voucher is received when you go through the checkout and can be used to get money off on your next visit.
Here are a couple I got recently.
You can see that, in total, I could reclaim £2.11 off my next bill.
Looks good doesn’t it - £2.11 off my next bill? However I wonder if you’ve ever got one of these vouchers and thought, “Hang on a minute, this means if I’d shopped at another supermarket I’d have got my food and other stuff for £2.11 less.” In actual fact what these vouchers mean is that really I’ve been overcharged. Even if you had thought that, you still have a problem because you don’t know at which of the other supermarkets in the “Brand Match” scheme (Asda, Sainsbury’s and Morrisons) you could have realised those savings. And, even if you did, is it likely that next week you will drive to that other supermarket just to pick up the items which are cheaper there? Would you stand in 4 different queues at 4 different supermarkets just to get the cheapest items? Isn’t the whole idea of supermarket shopping that you want to be able to pick up everything you need in one place to save visiting loads of different places. So what is the “Price Promise Voucher” (or whatever it’s called in the one where you shop) for? Put quite simply it is a type of loyalty inducement. They want you to go back to their supermarket and spend your money there – oh, and of course, redeem your vouchers and make that crucial saving except in reality you haven’t saved anything at all. What you’ve done is “not lost”. Think about it carefully. You’ve got back to zero after having paid more than you could have done elsewhere. (In my case I could have got my items for £2.11 less somewhere else so the overcharge of £2.11 is being credited back to me; crucially though, it’s not money in your hand.) The thing to be aware of is that the vouchers have a date limit on their redemption so you can’t just hand them in any time. In fact you can’t go back in the same day (if you’ve forgotten something) and use them because they don’t start ‘til the day after you receive them and they last for about 4 weeks.
This strict redemption period is what draws you back because you say to yourself I must use the voucher before it runs out. You go back to the very place which is apparently overcharging you so you can be overcharged again! And yet, just like Tom Utley, I felt quite pleased when I was given my voucher. “Ah yes,” I thought, “that means I’ll save £2.11 off the next bill.” I wasn’t realising that when I got my “£2.11 Tesco was simply helping me back to the zero position of no gain/no loss compared with their competitors.
I want to look at a couple of areas Tom did not cover as I think they’re also worth thinking about.
Firstly, I was not realising that Tesco had had my £2.11 for a week (or in some cases longer) in their bank account so I’ve really become a lender to one of the biggest supermarkets in the UK. Fancy that, me lending Tesco £2.11 for a week. Thing is though they didn’t ask if they could borrow it – they just took it and promised to give it me back next time I came in with that piece of paper!
Secondly, a further side to this is that, if you think about it, it could be interpreted as a type “price fixing”. What each one is saying is that whoever is selling the item for the lowest price is the one we will charge our customers. Sounds ok doesn’t it? But wait a minute, what happens if say an item is being sold for £4.00/£3.80/£3.75 in three of the places and last one says that they will put their price at £3.70. Is this fair? Well, it might be but what if the profit on this item was quite high anyway so even at £3.70 they’re still making a fair amount? The others were looking to make even more but they’ve been undercut and so agree to the £3.70 in their stores to match the lowest price and then give the difference back in the form of vouchers to their customers. The trouble is the lowest price may not necessarily be the best price for the customer. It could be that if this item was sold for £3.50 for instance it would still make a good profit but because we don’t know the details we can’t say. All we know is that the stores will still make a good profit at the lower price because it still has a good margin in it. Can you see the problem now with this whole concept?
A further twist to the psychological ploy is the other side of the coin when you get a piece of paper saying, like mine did a few weeks ago: “Today you have saved £0.94”. This is what you get:
This means I couldn’t have got my basket (trolley) of goods cheaper anywhere else (at stores in the scheme) and in fact your store was the cheapest, over all the items, by that £0.94. What’s this piece of paper worth? Well, nothing actually. It is simply telling you that this week you have not been overcharged. Oh well that’s good isn’t it? In a kind of really odd way you now feel as if you wished you had been overcharged so that you would have the ability to get some money off your next bill because it makes you feel good. The cleverness of the scheme is that it is actually making people happy who have been overcharged! Read that again. And it’s obviously working. Ask yourself how often do you change store or supermarket? Do you really want to keep having to learn new store layouts so you know where to find all your items or do you, like me, want to know that, every week, when you walk down aisle 6 you will find the veg & in aisle 23 the tinned fish and so on?
What can you do about it? Not a lot except that maybe in a week when you redeem your vouchers and get a “you have saved” printout you go and shop in a different store the next week as a punishment for the one who overcharged you the week before. Or maybe you have a better idea?
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