Consumers underestimate the power of comparison shopping, claims a five-year-old report from the Consumer Federation of America. “Consumers often do not realize that, for most products, a wide range of prices are available and, therefore, consumers often pay too much for the items they buy.”
[The study] results show that most consumers need a far lower price savings to persuade them to comparison shop than can actually be obtained from shopping around. These findings are particularly significant, since the available consumer behavior research indicates that, on the average, only about 50% of people shop around. An important reason as to why consumers do not shop around is the perception that it is not worth the effort. They rationalize that the savings potential will not be greater than the desired 10% savings needed to motivate action.
“The fact is that shopping around for most products will yield savings far greater than 10%,” said Jack Gillis, Director of Public Affairs, CFA. “The fifty percent of consumers who don’t shop around are losing out on thousands of dollars of potential savings. By luck some of these people will stumble onto the best priced item, but more than likely half of them will pay far more than they should.”
According to the study, “lower income, less educated, and younger” people are less likely to comparison shop. Those who could most profit from comparison shopping are least likely to do so. The report concludes by noting that “the single most important thing consumers can do to save money is to shop around.” It also recommends using magazines like Consumer Reports to compare product ratings.
I’ve found that there are huge price discrepancies between stores, even on common goods like groceries. Last summer I compared prices between the grocery store and the farmers market. I found that no one source had the best prices on every item, but the local produce stand actually had the best balance of quality and cost.
Comparison shopping is also useful when searching for services. When we purchased our first house, we needed to replace the roof. I made a list of twenty different roofing contractors, called around, and got information on pricing and lead times. For those I liked best, I asked for references. Yes, it took me a lot of time, but it also saved me a lot of money. Best of all, we got a quality roof.
GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, GE Capital Bank, and more.