Aiming for that 5% savings certificate? Do the math.
Katherine Albrecht CASPIAN

Grocery industry marketers must be some of the slickest people on the planet. Who else could take a paltry 1% savings and make it seem like 5%? Before you believe the hype that you're getting a good deal with that 5% certificate, do the math to find out how much you're really "saving."

According to the FMI, the average family (let's call them the Andersons) spends $87 on groceries every week. To make the math easier, let's say that the Andersons' weekly grocery budget is just slightly lower than average, at $83.33. Assuming the Andersons are "loyal" to their Surveillance Market and do not buy groceries anywhere else, it takes them exactly 3 weeks to accumulate $250 in purchases and qualify for the certificate.

Of course, that sort of loyalty is exactly what the stores want. They hope that the lure of 5% savings will keep consumers from shopping around to get the best deal when items go on special elsewhere. Mrs. Anderson, who does her family's shopping, is a good example of this mentality. She "loyally" accepts whatever prices Surveillance Supermarket charges, mentally calculating that the 5% savings will make up for the higher prices she occasionally notices.

The weeks pass, with Mrs. Anderson dutifully swiping her card and allowing the supermarket to record her family's purchases every time she shops. Then, finally, the $250 goal is reached. As her surveillance card is swiped through the card reader, the cash register churns out a coupon. "Congratulations, Mrs. Anderson," mutters the cashier, reading her name off the computer screen as he hands her the long-awaited savings certificate. With this proof of Surveillance Supermarket's benevolence in hand, the satisfied (and loyal) Mrs. Anderson heads home.

The following week Mrs. Anderson fills her cart with the usual $83.33 worth of groceries, but this time she happily presents her savings certificate at the checkout. Sure enough, 5% is deducted from the total; instead of the usual $83.33, this order comes to $79.16. Mrs. Anderson's loyalty to Surveillance Supermarket has saved her family a total of $4.17.

That's 5%, right?

Not so fast. Mrs. Anderson has devoted four weeks of her shopping "loyalty" and over $330 of hard-earned grocery money to Surveillance Supermarket for a total savings of only $4.17. When viewed in light of the $333.32 she has spent to date, that $4.17 represents only 1.3% off her total grocery expenditures.*

Looked at another way, if we spread her $4.17 "windfall" across all four of Mrs. Anderson's shopping visits, we would see a reduction of only $1.10 off each weekly expenditure of $83.33. This is hardly enough to justify passing up the specials at other markets. In fact, it is a decent bet that Mrs. Anderson could have easily saved $1.10 a week by avoiding high priced card markets altogether and shopping at a cheaper store with old-fashioned sales. As I've said elsewhere, the massive capital investment and overhead required to maintain detailed records on tens of thousands of shoppers is very costly. The person paying to keep track of how close Mrs. Anderson is to that $250 spending goal is none other than Mrs. Anderson herself.

To supermarket types reading this and lamenting the fact that we've caught on to the 5% savings scam, I offer you this solution: If you really want to "reward" Mrs. Anderson with 5% off her grocery spending, then you'll need to hand her $16.50 at the end of the month -- four times what you're currently offering. And preferably in cash.

Personally, I think that's still a pretty bad deal. Even with a "real" 5% discount, we would be forced to ask (as always), "5% off of what?" We've already seen how Surveillance Supermarket raises "regular" prices to compensate for losses elsewhere and to make discounts seem deeper.

Saving $4.17 a month -- or even $16.50 for that matter -- could not induce me to allow strangers to store the minutiae of my life in Big-Brother's-law- enforcement -and -subpoena -friendly database (not to mention letting them rummage through my grocery cart to better "target" me for promotional schemes). Though ultimately the decision of whether to be numbered and monitored rests with each person's conscience and level of trust in "the system," it is a decision that should be made carefully, based on all the facts, not spurious supermarket hype about artificial "savings."

*Actually, that 1.3% savings scenario is very generous, since it assumes the 5% discount will be applied to a large grocery order. It is far more likely that a 5% savings certificate will be applied to an "average" sized shopping order of $21.50. A shopper would save $1.08 on an order of $21.50, after spending a total of $271.50. Their total savings in that case would work out to less than half of a percent -- 0.4%.