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Archive for August, 2009|Monthly archive page

The Inefficient Grocery Shopper

In Business, Finance, Grocery, Lifestyle, Marketing, Politics on August 21, 2009 at 1:14 am

Last week I walked into the grocery store expecting to spend $20 – $30. After all was said and done, I found myself debiting almost $130 from my Chase account. I would love to tell you that I was surprised, but I cannot. This happens to me all the time; upon further inquiry, I found out that this happens to many people with an alarming frequency. Why is that? and why isn’t anyone doing anything about it?

In economic terms, we call this phenomena a disconnect between realized behavior and prior intent.  For most Americans, purchase intent and purchase behavior aren’t even remotely correlated.  To better understand this problem, we collected anecdotal frustruations to identify the key sources of shopping inefficiency. Some of the mistakes were made in the grocery aisle, while others were made in the home.  The combined list included thirty-seven (37) unique actions, however near universal consensus was found amongst the following eight (8) behaviors.

  • Forgotten Purchases – suffering a memory block about a needed item but remembering it after you’ve left the store. | Tweet: I’m guilty!
  • Impulse Buys – purchasing items only because they were on sale, accessible and/or prominently featured.| Tweet: I’m guilty!
  • Binge Buying – buying items in extremely large quantities to avoid the possibility of it ever running out.| Tweet: I’m guilty!
  • Duplicate Purchases – making a purchase on a “just in case” basis only to find out that you already have more than is needed.| Tweet: I’m guilty!
  • Subjective Consumption – focusing deeply and purchasing items you use while mis-prioritizing items needed by others in the household.| Tweet: I’m guilty!
  • Recipe Roulette – risking the taste of a meal by substituting an available ingredient in lieu of making a special trip to the store| Tweet: I’m guilty!
  • Unplanned Trips – making an unplanned trip to the store for one or two essential items.| Tweet: I’m guilty!
  • Plan B Dining – ordering take-out or fast food because you don’t have the ingredients to prepare a decent home-cooked meal| Tweet: I’m guilty!

Using only three of the mistakes (impulse shopping, unplanned trips & plan B dining), we did some analysis to quantify the impact of the problem. We concluded that consumer inefficiency in the store was a $2800 a year problem.

  1. Impulse Purchases: The average household with children spends $119.30 per week on food and other grocery items. Of this amount, approximately 20% represent spontaneous and unnecessary buys that reflect the wants of the consumer, not an immediate need.  On an annual basis, impulse buys create $1240 of economic waste.
  2. Unplanned Trips: The average household makes 2 trips to the grocery store per week. Assuming one of those trips is unnecessary, a 10 mile distance between the home and grocery store, gas prices of $3.00 per gallon and fuel efficiency of 12 mpg, unplanned trips.  On an annual basis, unplanned trips create $260 of economic waste.
  3. Plan B Dining – One of the biggest sources of economic waste is switching the venue of food consumption from the home to a restaurant or take-out counter. In general, the cost of a meal prepared outside of the home (approximately $15 per person) costs between 3x and 6x the cost of preparing that same meal at home.  Assuming a family can eat one more meal at home and a markup multiple 3x, on an annual basis, Plan B Dining creates $1300 of economic waste.

In 2008, the median household income in the US was $50,233 and grocery waste represents 5.5% of that figure.  To put it in other terms, solving the shopping inefficiency issue has the same effect as President Barack Obama putting forward a $392 billion stimulus package that reaches every American family without increasing the federal deficit.

Surely, there will be opposition to such an endeavor. But no goal worth achieving was ever met without challenge or adversity. Solving the inefficiency problem has been a constant obsession and is the goal of my company, HomeShop Technologies, Inc. We surely hope you will join and support us as we embark upon this journey.

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