How to Identify (and Take Advantage of) ‘Loss Leaders’ in Grocery and Department Store Flyers

How to Identify (and Take Advantage of) ‘Loss Leaders’ in Grocery and Department Store Flyers

Almost every department and grocery store chain in America produces a weekly flyer describing the sales of the week in the store. The stores do this because it works – good prices get customers in the store spending money, and when they’re in there, they often buy lots of items as they’re buying other groceries, too.

In order to really entice customers and get them in the door, stores will regularly promote really steep sales on specific items, sometimes even cutting those prices below what it costs the grocery store to get those items in stock. Those exceptional sales are called “loss leaders,” and they’re usually an opportunity for customers to get items at an extreme discount.

(It’s worth noting here that, as customers, it is extremely difficult to identify true “loss leaders” because we cannot see how much the grocery store itself is paying the wholesaler or distributor for the item. All we can really see is how steep the discount is compared to the regular price of the item, which can hint at the presence of a loss leader but doesn’t guarantee it. When I’m talking about loss leaders here, I’m talking about regularly-stocked items with steep discounts over their typical price.)

Why doesn’t everyone just do this, you might ask yourself. Why doesn’t everyone just buy tons of loss leaders at the grocery store or the department store? It turns out that it’s not as easy as walking into a store and heading to the “loss leader” table.

First of all, loss leaders are usually mixed in with mediocre sales in the store flyer. This is so that the store can appear to have lots of sales going on, but the goal is to get customers to notice the sales that seem really good and thus believe that all of the sales are really good, even if they’re not. So, they might advertise something like a dozen eggs for $0.59, which is a great bargain, but they’ll put that next to a bunch of sales that are only a few pennies off of the regular price, in the hopes of convincing customers that these other sales are almost as good.

Second, the stores don’t clearly label their “loss leaders.” It’s not immediately obvious which sales in the flyer really are the best ones. If you see two sale prices side by side, they’re not going to tell you which one is the loss leader. They’re going to try to make them look similar, even though one of them is actually the good deal and the other one is still a sale, but a mediocre one.

Third, there’s no guarantee that your needs will be fulfilled by loss leaders, or that you’ll have any need for loss leaders. If you don’t have children and diapers on on sale at a good enough price that they’re effectively a “loss leader,” that’s not particularly useful to you. Buying diapers just because they’re on sale isn’t going to save you any money (and it’s unlikely that you can flip them with little enough effort to make it profitable). Similarly, just because you need to stock up on flour doesn’t mean that flour will be on deep discount this week.

Why bother with trying to figure this out, then, if there are so many drawbacks? Again, there are several reasons.

For starters, everyone has to buy food and at least a few household supplies, and if you can get lower prices on the food and household supplies you plan to buy, that’s a benefit.

Also, it’s a very good strategy to plan your meals for the upcoming week around what’s on sale in the grocery flyer, so if you can identify the true loss leaders for the week, you can plan meals around some truly well-discounted items.

Not only that, you’ll sometimes find that when you stack coupons with loss leaders, you can get stuff for virtually (or sometimes literally) nothing. I’m not much of a coupon clipper but I have actually stumbled across a few of these in the recent past. I was able to buy a ton of fruit juice recently for literally pennies per quart because I stacked a coupon on top of a loss leader sale.

In other words, when your needs and a store’s loss leader offering line up well, you can save a ton of money, and that happens surprisingly frequently if you approach shopping with some flexibility.

So, how does a person identify loss leaders in a grocery store or department store flyer? How does a person know whether a particular sale is a good one? Here are some strategies that I use to figure this out.

Know the Regular Prices

For starters, one way of assessing whether a particular sale is a loss leader is knowing what the original price is. If a sale is knocking a large portion of the price, then it’s probably a loss leader or at least a good bargain. That doesn’t work, however, if you don’t know the regular price of an item.

The best strategy for doing this is to keep a price book. A price book is simply a listing of the regular prices on items of interest at your grocery store or stores of choice.

A price book can be as simple or as complex as you want it to be. You can focus on just a single store or include prices from several stores. You can include just the twenty or so items you buy most frequently, or you can include tons of items. As with many things in life, the more effort you put into it, the more useful it is. At the same time, there comes a point where you get diminishing returns for additional effort.

Here’s how to make a very simple price book using your smart phone. This is an exact strategy I use myself.

First of all, you need to have the Evernote app on your phone. There are other apps that can do all of the things described below, but Evernote does them easily.

For a month or so, whenever you go to the grocery store that you primarily use, take a picture of your receipt and save it in Evernote with your phone. You can do this in about fifteen seconds. This simply means that you don’t have to hold onto that receipt for future reference.

After a month or two, sit down for about half an hour at a computer and access your notes via the Evernote website. Pull up all of your saved receipts, then look for any and all items that you purchased multiple times during that month. What did you buy more than once?

Those things are your staples. They make up the backbone of your purchases at the store, and they’re the ones that you’re going to care the most about.

Then, look at the receipts carefully and see if you can figure out what the regular price on that item is. For example, maybe the regular price on the gallon of milk you buy is $2.99. Maybe the type of cheese you buy is $1.99 a package.

Start a new note called “Price Book” and for each item that you examine, list that item and the regular price for that item in the new note. So, for example, you might list “Gallon store brand skim milk – $2.99” as a single line in the “Price Book” note.

Once you’ve done that, you have a simple price book! You can always add more items to it when you notice that you’re buying something regularly, and you should update it if prices at your store change. You can also make price books for each store that you regularly shop at, since comparing price books can help you figure out which is really the best store to patronize.

Then, put that price book to use whenever you plan meals and make a grocery list. As I’ve described many times before, the most effective way to shop for groceries is to start with the flyer, plan meals around it, and make a grocery list from that meal plan. That way, you hit the grocery store with a list that already incorporates sales and has everything you need on it, so you can just trust that list, blow through the store quickly, and have a nice small bill at the end.

How does a price book enter into that? You can use it when evaluating the flyer at the very beginning. Just pull out your price book when figuring out which sale items from the flyer to plan your meals around and identify which items in the flyer really are heavily discounted. That way, you can be sure that you’re truly planning low-cost meals.

This doesn’t add much time at all to the meal planning or list creation process, but it definitely can save you money by helping you avoid “sale” items that really aren’t discounted very much.

Save Large Face Value Coupons You Notice – and Cross Check Them

This strategy doesn’t always identify loss leaders, but it often does and it can often lead to free items without having to put much effort at all into saving coupons.

Here’s what you need to do. Whenever you happen to have a low-effort opportunity to snag a coupon, do so, and keep them all in a single place. I have a coupon envelope that I keep on the fridge with a magnet that I add coupons to whenever I find them, for example.

What are low-effort opportunities for coupons? If you find yourself with a newspaper and a few free minutes, snag some of the coupons you find in the coupon flyer. If you see someone sharing a good coupon on social media, grab it and print it. If you see a coupon on a shelf at a grocery store, snag it.

There are just a couple of principles that I use to make this worthwhile. I only grab coupons for stuff I’m likely to buy anyway, and I generally only grab coupons that are worth a dollar or more or else makes up a significant portion of the price of the item.

I simply toss those coupons in my pocket and eventually I stick them into my coupon envelope.

Then, when I’m going through the flyer, I also grab any coupons that I have in that envelope and see how they line up. About once a month or so, I hit pay dirt – I find a coupon that stacks perfectly with a store sale, cutting the price down to almost nothing. If I don’t find that kind of stacking, I don’t bother with the coupon – in fact, I’ll often let it expire and just toss it unless it’s a high-value one that I can plan around.

What happens when you stack a nice discount in a grocery flyer along with a coupon is that you often end up paying almost nothing – or even sometimes nothing at all – for an item. As I noted earlier, I’ve received bottles of fruit juice for less than a dime a bottle in the last month, and in previous years I’ve received things like packages of diapers and packages of cheese for free or for just a few pennies.

Focus Only on Buying Stuff You Will Actually Use

There is one fundamental problem with this kind of approach, however: it is still focused on buying stuff. You’re staring at sales, so there’s often a temptation to buy stuff that you don’t actually need or won’t actually use. It’s even worse because you’re not simply bargain hunting for a specific item – you’re looking at a flyer to decide what to buy because you’re using it as the centerpiece for meal planning (and for buying items of household necessity).

When you’re looking at a flyer with such an open mindset toward buying, it’s really, really easy to get drawn in by a loss leader and decide to buy it. Simply recognizing a good price on something can sometimes be enough to get you to buy it, even when you don’t actually have some sort of plan for using it.

You need to be mindful of that kind of impulsive buying. If you identify a loss leader – or a potential loss leader – from a store flyer, that’s still not reason enough to buy it unless you’ve got a plan for putting it to use in the near future.

For example, buying a food item just because it happens to be on tremendous discount might seem like a great move, but if you don’t have a plan for using that item in a meal at some point before it expires, it’s not a good purchase. Any food purchase that has some significant likelihood of winding up in the trash or of being eaten out of habit instead of out of hunger or out of genuine pleasure isn’t an effective use of your money, even if that item does happen to be on a nice discount.

In other words, just because something happens to be a “loss leader” doesn’t mean that it suddenly becomes a value to you.

Stock Up on Frequently Used Nonperishable Loss Leaders

One of the best ways to take advantage of loss leaders is to stock up hard when the right loss leader comes along. If you can identify a steep discount on something that you use frequently that won’t go bad very often, stock up big time.

Household supplies fall into this category very nicely. Things like trash bags, toilet paper, dish soap, laundry soap, hand soap, toothpaste, shampoo, and so on are all items that make a lot of sense to buy in bulk, so if you find a loss leader on those items (using the price book strategy mentioned above), stock up big time. Don’t hesitate to buy six bottles of your preferred shampoo if it’s selling for 70% off of the regular price!

The exact same thing is true for nonperishable food items – dry items, or items that can be stored for a long time in jars or cans or in the freezer. I’ll always stock up on flour whenever I see it on a steep sale because I bake a lot of things and I know I’ll use it. The same is true for things like pasta or spices or flash-frozen vegetables – in fact, it wasn’t long ago that I bought half a cart full of flash-frozen vegetable bags when the price was the lowest I’d ever seen it.

Again, it is never a good idea to buy items that you’re unsure that you will use. This is true even when stocking up like this – if you’re unsure whether you will use more than six bottles of shampoo in the next year, don’t buy ten just in case. There are few things in life that are more wasteful than just throwing away items in the closet that have become unusable because they’ve just sat there for too long.

Final Thoughts

All of the strategies above really boil down to three key steps.

First, know the regular prices on items you consistently buy. You can do this by making a simple “price book” on your phone, which is just a list of the regular prices of your regular purchases. An easy way to start is by just taking pictures of your receipts and then combining them together after you have a month or two to collect them.

Second, center your shopping and meal planning around an examination of the grocery store and/or department store flyer. See what’s being promoted as sales for the week, then use your price book to see if those sales are exceptional ones. What you’re really looking for are sales that cut 40% or more off of the price of the item as those are ones to center meals around, though other sales can be useful, too.

Third, stock up on nonperishable items you use consistently if the discount is that steep. Those items will keep for a long time, so you’re effectively buying your detergent or shampoo or flour for the next year right now at a very nice discount.

If you follow those steps, you’ll find that big sales jump out at you and your food and household supply spending over the long haul will drop significantly, keeping money in your pocket where it belongs.

The post How to Identify (and Take Advantage of) ‘Loss Leaders’ in Grocery and Department Store Flyers appeared first on The Simple Dollar.

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