Supermarket Price Promise Swizz

Tesco Price Promise

Most of the big supermarkets work out at the till what your shop would’ve cost at their main competitors, and let you have the difference off your next shop.  You’ll likely have seen something like the image to the left.

Obviously I’m an awesome shopper so saved lots of money…or did I?

Problem is, unless you shop in a very quirky way, you won’t really win.  The receipt to the left definitely gives the impression that had I tried to buy equivalent things from competitors, I’d have spent £3.18 more.

Let’s simplify things massively and pretend there’s only 3 identical products that each supermarket sells.  Apples, oranges and bananas.  I’ll also pretend there’s only 3 supermarkets for this purpose (sorry Morrisons, but there aren’t many of you down South).  They each price these items differently.

[table]
 ,Apple,Orange,Banana
Tesco,10p,20p,20p
Asda,20p,10p,20p
Sainsbury's,20p,20p,10p
[/table]

In the above situation, it may be that supermarkets buy all 3 items for (say) 8p each.  They make a very slim profit on one item, but a much bigger mark up on the other two.  The precise details of this are fairly irrelevant, but you can bet they won’t be losing money on any products.

What you (unrealistically) could do

Based on the above, a really savvy shopper with all the information, infinite time, and zero travel costs, would buy their apples from Tesco, oranges from Asda, and bananas from Sainsbury’s.  Problem is, few of us have all the information, or infinite time, or zero travel costs…and the supermarkets know this.

Buying one product, you win whatever

If you just buy one apple from Tesco, they’ll tell you your shop was 10p cheaper than their competitors.  If you just buy one apple from Asda or Sainsbury’s, they’ll admit they’re 10p more expensive than Tesco, but give you a voucher for it, so you feel you’ve still got the lowest possible price.

…but virtually nobody buys just one product

Whichever of the three supermarkets you’re in, if you buy all three products, you’ll pay 50p.  Therefore the till receipt will proudly say you couldn’t have saved anything by buying from either of their competitors.  This is the issue.

You only win if you buy the products at the best price of the competition.  Bizarrely if you only buy the products at the worst price of the competition, you can do ok.  Eg if you just bought an orange and a banana from Tesco for 40p total, it’d tell you both Asda and Sainsbury’s would’ve saved you 10p each, so you’d get that 10p back.

As soon as you have any kind of mix (which inevitably the vast majority of shopping baskets will do), it all tends to get blurred together.

More often than not it says I saved money, why?

What will also happen in the real world is that Tesco will have bright red signs banging on about how cheap their apples are, whilst having fairly inconspicuous price signs next to their oranges and bananas.  So chances are when people shop at Tesco they’ll buy lots of apples and not very many oranges/bananas, and the till receipt will make them feel pleased about how much they saved.  It’s no coincidence that in Asda/Sainsbury’s, people would likely buy more oranges/bananas respectively, again due to highlighting of low price, so people shopping there would also feel they’d done very well.

Taking the very real example of my own purchase receipt above, inevitably I was drawn to some of Tesco’s special offers that day.  On those items I probably did pay a bit less than the other big supermarkets.  I’ll also have bought some products at a not particularly good price, simply because I needed them and couldn’t be bothered to go to multiple shops.  The leaning towards special offers means you’ll often think the supermarket you shop at gives the best prices overall.

The ultimate (but unrealistic) solution

So I guess the best solution if only want to visit one shop and have no pride(!) is to put through each individual item as a whole purchase in itself.  That way each separate item will get price checked, and you should then get the best price on each individual item all added together, rather than all the items added together then check the overall price.

In my simple world, at Tesco, you’d pay 10p for your apple (great, best price), pay 20p for your orange and get a 10p voucher back (great, 10p net cost), then similarly pay 20p for your banana and get a 10p voucher back (again, great, 10p net cost).  Net impact, you get all three items for just 30p.

…I wonder if anyone actually does this?!

A more realistic solution?

You know sometimes in the past you might’ve been buying some stuff for you, some stuff for someone else, so you put one of those dividers to break your shopping into two separate purchases?  It’s perhaps very slightly annoying for the checkout operator, but nowhere near as much as doing each item individually!  I was thinking it might make sense to do this, dividing your shop into two:

First batch with all the items not on special offer, where you don’t think you’re getting a good price and are probably cheaper elsewhere

Second batch with the items where you’re confident you’re getting a great deal price-wise.

Doing them in this order means the first batch (overpriced) will give you the discount voucher that you can then use immediately on the second batch (where it’ll probably say you’ve made huge savings)!

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