Four Ways That Grocery Stores Make Their Money via Pricing

The Corner Grocery

If you’re trying to save money at the grocery store – and these days, who isn’t? – then it might change your shopping habits if you knew about the FOUR WAYS THAT GROCERY STORES WORK THEIR PRICING in order to maximize their own profits.

Sure, you can use coupons and scan the sales circular for deals, but to really help cut your food budget you may need to adjust where you do your shopping instead.

The four types of pricing structures that grocery stores use are:

  • HIGH-LOW:  The traditional method of pricing seen at traditional grocers – the stores allow for a few pricing loss-leaders to bring customers into the store, and then stick higher prices on other items to make up the difference.  Buy-one-get-one is a popular option, as are discount cards for frequent customers.
  • EVERYDAY LOW PRICES:  These grocers don’t often run sales, as they have their prices set at a lower price point than would a traditional grocery store.  Does this work?  Web Watch will just say that there’s a reason that Wal-Mart tops the Fortune 500 this year, and groceries play a BIG part of that success.
  • DISCOUNT CLUBS: The most well-known membership clubs of Costco, BJ’s, and Sam’s Club may not carry a wide selection, but if you need a 2-lb jar of mustard and don’t mind the barren warehouse shopping experience, the low prices will keep you buying more.
  • AGGRESSIVE PRICING:  specialty stores with small footprints and extreme low prices match up with low overhead and even lower variety.  But such “dollar store” tactics have built up a following.
So how can you get the most for your dollar by knowing these four pricing structures?  It all depends on how flexible you are with your shopping list:
  • If you’re not brand-loyal and can keep track of the sales flyers and couponing, then the High-Low method can be taken advantage of. 
  • If you’re willing to sacrifice choice and variety for low prices… or have the room to store large quantities of food – then the Everyday Low Price or Discount Club method will work for you as well. 
  • Visiting dollar stores for groceries may not be everyone’s cup of tea, but if they have what you’re looking for, then their prices can’t be beat.