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Don’t Underestimate the Value of Comparison Shopping Print
Tuesday, 29th April 2008 (by J.D.)This article is about Shopping
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.
April 29th, 2008 at 5:13 am
Just last night on the news they were showing how people comparison shop by using internet phones to show cheaper prices online to store managers to price haggle in the store.
April 29th, 2008 at 5:28 am
I have saved a lot of money by comparison shopping on the Internet. There has never been so much great information so readily available to the comparison shopper as there is today.
What stood out to me in this article is your comment “lower income, less educated, and younger” people are less likely to comparison shop. It reminds me that those that get rich do what rich people do. Success with money is so much about behavior!
April 29th, 2008 at 6:11 am
I spent the time several months ago to comparison shop at my local grocery stores, creating a price book in the process. I’ve been able to cut my grocery bill substantially.
This past weekend, I comparison-shopped within my store of choice, looking at bulk prices versus store brand prices. In most cases (with one exception) the items I compared were cheaper in the bulk section, with the added bonus of less packaging for the landfill or recycling bin!
The results are posted in my blog today . . .
April 29th, 2008 at 6:39 am
You are so right about groceries, particularly produce. I have even discovered some wide discrepancy in price between produce sections at different stores. The high-end grocers tend to have the highest produce costs, while it is tough to beat Walmart’s costs for produce (in our area).
April 29th, 2008 at 6:56 am
This is sort of off topic, but I am kicking around the idea of buying into a farm share instead of getting produce at the grocery store. Does anybody have any experience with these?
If you don’t know what a farm share is, basically you pay a local farmer (actually a coop of farmers) up front for a share of his expected output over a defined length of time. In my case it would be $300 over 22 weeks (June - October). Then every week you get a box of whatever the farmer harvested delivered to your door for a nominal delivery charge ($3-$5).
The rub is, you don’t know in advance exactly what you are going to get, just that it feeds x number of people for a week. If you do the maths, that works out to around $16 per week with the delivery charge.
So anybody have any experience with anything like this? Also, the produce we buy now are mostly not organic, whereas the farm share is non-certified organic. IOW, the farmers say they use organic methods, but haven’t gotten certified because that is expensive.
I should add that this would not eliminate the need to buy certain produce (lemons, limes, avocados, etc) at the grocery store still, so I’m not looking at it from a pure frugality perspective. Also, we would have to learn to eat veggies we don’t necessarily like, such as eggplant, zuchinni, cabbage, etc.
April 29th, 2008 at 7:00 am
You are dead on about price discrepancies. One big area is clothing. My wife and I get most of my work clothes at Marshals, Ross, or outlet stores. I get the same dress pants at the discount store as I would at Macy’s, but pay $20 vs. $50. I get most of my dress shirts at Geoffrey Beene’s outlet store. Again, I pay $20 for a top notch dress shirt vs. $50 at Macy’s.
Same cloths, same quality, same look. I just pay 60% less.
April 29th, 2008 at 7:16 am
I used to comparison shop more, but time is a huge obstacle for me. I really only do it for big ticket items now, or things I can readily search for on the internet. From experience I’ve discovered that manufacturers often charge more than retail outlets, as they don’t want to undercut the resellers. I consider the potential premium on items I haven’t shopped around on as the expense I incur to spend more time with my family.
FWIW, several of my friends buy into farm shares and love it. You are right, willingness to try new foods seems to be a key in their enjoyment. One of them is a foodie, and at least once a month in summer is looking for a recipe to try with one of her new veggies.
April 29th, 2008 at 7:20 am
Comparison shopping is an interesting concept. Absolutely it can be worthwhile from a savings standpoint. But what if you are trying to make a statement with your money, i.e. voting with your dollars. I can’t stand Wal-mart, so I know I’m not always getting the best deal. I realize that. Also, keeping your spending $$ local my result in paying a higher price. Your priorities may dictate paying more… there are times you can’t have it both ways.
April 29th, 2008 at 7:21 am
For big ticket items, we do it all, internet browse to get a feeling of the range of prices and features we want and then visit various stores to see actual products. Usually that can amount to some really big savings. Additionally, you can often find items at steep discounts because of floor samples, last seasons model, etc. that you can’t get on the internet and you can usually haggle a bit as well.
On the flip side, I have a problem driving 30 more minutes to save a few bucks I’ll just chew up in gas and time. I feel it really is a balancing act.
April 29th, 2008 at 7:33 am
I’ll add that *actively* comparison shopping can save money (like when you’re about to do a new roof or need a new computer) but *passively* comparison shopping can cause you to spend more.
What I mean is that you should be careful about browsing the Sunday circulars or subscribing to every online retailer’s newsletter when you’re not really in the market for something.
For example, I love shopping at Costco and I signed up for their email newsletter/ad, thinking that I’d want to know if there was a good deal on a computer or some electronic gadget. I used to look forward to getting it and checking out all the deals. The problem is that I don’t really need a new computer or electronic gadget. But the deals are enticing and tempt me to buy something that I wasn’t really going to buy in the first place (isn’t that one of the main purposes of advertising).
April 29th, 2008 at 7:52 am
We comparison shop groceries all the time. Our local Save A Lot store is 40% lower than most of the other grocery stores in the area.
I just wish we had comparison shopped for our car. We bought it at the first dealer we went to. I know we spent more than we needed to.Just because we wanted that car to much.
April 29th, 2008 at 8:03 am
I’m obviously all for saving money, but when it comes to comparison shopping I usually have to stop and ask myself whether its truly worth it. With products like electronics or large items its usually easy to quickly comparison shop online — there are plenty of search engines that provide a quick way of getting a feel for a range of prices.
But when it comes to things like groceries or clothes, its much harder to easier to comparison shop. With groceries, you pretty much have to physically check the other store, which can be a huge effort, especially when dealing with a large list. Plus, grocery store prices change all the time. Same for clothes. I fully recognize that I could probably save money — maybe even a decent amount of money — on food and clothes, but that is when time becomes such a huge issue.
April 29th, 2008 at 8:05 am
Price discrepancies are everywhere. The most fun is when you know prices well enough to know when something is really a deal. When you are able to hunt out the best prices it allows you to spend you money on things that really matter to you.
April 29th, 2008 at 8:19 am
Great article. I have strived to compare prices on some big ticket items: electronics mostly. Presents for my kids. Things like that…
I’ve tried to convince my wife to do more comparisons for grocery shopping. I used to point out the sales in the Sunday paper of stuff we needed, but because of housework, kids in school and the like, she just wants to go to one store and get it all done in one trip. Understandable…but take the ads with you and start asking the store you shop in to MATCH THE COMPETITOR’S PRICE! It amazes me that so few people do this, unless it’s a big ticket item.
Nickels, dimes and a buck or two adds up!
April 29th, 2008 at 8:25 am
icup farm shares are great. As far as the different produce get ahold of the Madison County WI extension office and ask about a veggie cookbook put out by Madison county growers. I think it is called Asparagus to Zuccini. It was put out by the CSA’s in that aera. I loaned my copy and never got it back. It was the best cookbook I had for vegies with a lot of fun recepits. You are also supporting the local family farmer which is so important.
As far as comparison shopping I do it all the time. It amazes mt friends that we eat so well with four kids and I spend half of what some of my single friends do. But like saving freak says it frees up the money for things that are important.
April 29th, 2008 at 8:33 am
There are a lot of intangibles to consider, I think. Things like buying local (mentioned above) but also things like return policies, free delivery or gift wrapping, and the way in which forming a relationship with a store can sometimes pay off down the road even if prices are not always the best at a specific time, and so sometimes you do decide to spend more even if you know that’s what you’re doing. That’s the way it has worked for us when we have done house remodelling — we have never ended up with the lowest estimate for painting or anything else, because quality considerations, time estimates, and so on were more important.
April 29th, 2008 at 8:45 am
We had a farm share for several summers and loved it. Our farm provided recipes every week for several of the veggies of the week. It helps if you’re a flexible eater, not determined to have your regular meat and potatoes every time. But it led us to branch out and eat stuff we’d never tried before. I still use some of those recipes.
April 29th, 2008 at 8:48 am
I usually check prices on the internet before buying something in a store, but I don’t often drive from store to store. Of course I don’t buy many expensive things either. I think anything over a hundred dollars or two I would certainly do some serious comparison shopping.
April 29th, 2008 at 8:53 am
“lower income, less educated, and younger people are less likely to comparison shop.” MORE PROOF THAT FINANCIAL SUCCESS IS A CHOICE. Some people CHOOSE to comparison shop and save money, others choose not to. Life is choices, and each choice (in my opinion) either leads one closer to financial security, or farther from “critical mass” to use a Bob Brinker phrase. I choose to comparison shop, to use a grocery price book, to invest the time. The people who choose not to comparison shop, or to do it only for large items, have made a valid choice for themselves also.
April 29th, 2008 at 9:44 am
I agree with pps, that as with most things, there’s a balance between getting the lowest possible price on everything and the expenditure of time and energy.
Our time is worth a lot to us, so driving to multiple groceries stores isn’t worth it; stocking up during good sales at our local grocery store is. I know that Lands’ End items are well-made, so when I can use a $25 discount to buy overstock items we need online, I do. If we want to buy a new TV, I spend a few hours over a few weeks evaluating various models and checking out prices with online and brick-n-mortar stores. The happiest purchase we ever had buying a car was with a broker. Second happiest was after doing a ton of online research before talking to any dealers.
April 29th, 2008 at 9:49 am
It is true that comparison shopping for smaller items such as groceries and clothing can be quite time consuming….AT FIRST. The key, as many have pointed out, is that no one place has the best price on everything. Once you get to know each of the markets, grocery stores and retailers in your area, the savings almost becomes second nature. For instance, I have one grocery store that I buy coffee and produce from, another that I buy milk and eggs from, and another that I buy things like frozen items, bread, rice and snacks from. On a day to day basis, each of these stores tends to have the best quality at the best price for those given items. However, if the same item or items go on sale at a better price at another store, I of course buy the item at the store that has the sale price. That said, a huge key to saving big on groceries and small items is to stock up when they are on sale! Is your favorite brand of bread on sale for buy-one-get-one-free? Fill up the freezer!!! Found a pair of quality shoes for your toddler at an unbelievable price? Don’t just buy one pair! Buy the size he or she needs now and another pair in a size or two larger for when they first pair become too small. If you can get yourself ahead of the “game” you should never have to pay anywhere near full price for most items.
April 29th, 2008 at 9:58 am
I comparison shop all the time, even just by using Froogle. I’m always amazed when I find stores online that are selling the same product for significantly more than other stores - don’t they know that people comparison shop? Well, I guess half of us don’t, so that explains that! The other day I found a pair of shoes for $69.95 at one store and $107.00 at another. Guess which store I ordered my shoes from?
April 29th, 2008 at 10:17 am
@icup - we don’t use a farm share precisely, but we did just sign on again with a CSA delivery we’ve used before (Klesicks’ Farm). It’s similar, except that ours gets produce from other farms and delivers them with their own produce (I think they are a small farm). So good variety, but limited control over what we receive each week. And more expensive - ours is $23 / box per week including delivery, or $506 for a 22 week period. We are getting one box of fruit only every other week, and one box of veggies every week for a total of $69 every two weeks for $759 every 22 weeks. Each box is supposed to be enough produce for a normal family of four for one week. We also pay weekly - I guess we might find something cheaper if we signed up long-term.
We really liked it, and they say that they will work with you if there is something your family doesn’t like (but I’m too lazy to do that). The quality is great, and I kind of like having someone else choose my produce. It’s like getting a gift and not knowing what it is, kind of fun if you like surprises (they also post the box contents online each week so you can check before you get your box - but who has the time?).
Not sure if that helps. It sounds like what we are doing is a middle-ground between what you are thinking about and the grocery store.
If you are in their delivery area (greater-Seattle only, I think), Pioneer Organics is a little more expensive, but has a great online presence so you can easily control what you receive each week - plus they offer other organic groceries with no delivery charge if you sign up for their produce delivery. Their customer service is great, too - we actually did receive some bad produce, and when we complained they refunded the produce and also fixed the problem when it occured again. All it took was a brief email.
But we’re still going back to the CSA - better value for what we need now.
April 29th, 2008 at 10:31 am
@Ethel, is there a difference between a farm share and a CSA? If so, I meant to say CSA, that is what I’m getting, only we are getting the small family version, which is why ours is a bit cheaper.
I’m glad to hear the positive comments all around about these things. Its really helping me make the choice. I was a little worried about it, but I think supporting the local farms is way more important than worrying about whether my grocery bill is $5 more or less expensive.
@Teresa, Having different stores for different family food staple items is an absolutely brilliant idea. I had never even considered that before. We just go to the grocery store closest to us, but in a small town, they really are all pretty close. I’m going to have to try that too.
April 29th, 2008 at 10:36 am
About traveling to multiple stores and the value of one’s time (not to mention the cost of gas): These are valid points and must be taken into consideration. I, for one, am fortunate enough to have 4 of the stores I frequent within a mile and a half of my home, and I live in a far suburban to somewhat rural area. So, I have to believe that multiple store shopping is possible for most. Other stores that I frequent are nearer to where I work. So, for the most part distance is not a problem. As far as time is concerned, I tend to use lunch hours, quick stops on the way home from work, and allotted weekend time for major “shopping outings”. Especially with the cost of gas skyrocketing like it is, I try to never have to go out of my way for anything anymore. One store that I really like that is normally too far to travel to, I shop at only when I am taking my child back to college, as it is on the way then.
April 29th, 2008 at 10:52 am
Obviously comparison shopping includes factors other than price. For instance, has anyone else noticed that Walmart’s meat and produce has no flavor?
April 29th, 2008 at 11:05 am
I try to achieve a balance of supporting local businesses, not spending too much of my own time chasing an extra $1 off, not wasting gas, and getting the best quality possible.
When I can get free shipping, I’ll buy drugstore products online. I buy all my produce at a local family produce stand. For clothing and shoes, I have certain brands that I really like (some are expensive); I know my sizes, so I wait until I can find items on ebay (new with tags), bluefly.com, or Nordstrom Rack — at 50% off or more. If it’s something I’ll wear through quickly no matter how high the quality — workout clothes, white tank tops, flip flops — I buy on sale or at Target.
April 29th, 2008 at 11:18 am
@Blade: True, you want the best quality at the best price. “Cheap” can actually be a complete waste of money! I think we all have certain items we are willing to spend less on and others we simply will not “skimp” on. For me, I do not want peanut butter that is filled with sugar and hydrogenated oils just because it’s cheap! Some may say, “But my budget does not allow for the natural, organic and more nutritious foods”. I can sympathize. But you would be surprised. I do not know if we are allowed to mention specific retailers, so I won’t, but I buy all natural peanut butter with nothing but peanuts and salt in it for $1.69 per 16oz jar. That is just one example. In general, I try to buy all natural and/or organic whenever I can. Sometimes I find products that fit my budget, at other times it is just too cost prohibitive. I hope as more people become aware of the dangers of hydrogenated oils, high fructose corn syrup, pesticides ,etc. that the healthier products will become more affordable to us all. Personally, I walk away from anything with corn syrup or hyrogenated oil in it. It was tough at first, the cheaper price of the corn syrup filled bread called to the “frugal me” from the grocery shelves for a long time! But that is a whole other topic!!! On the otherhand, I buy the store brand dishwasher detergent for $1.09, and it works just fine for me. In summary, finding quality items, and/or items that work for you can be just as important as cost.
April 29th, 2008 at 11:35 am
Re: buying different grocery items at different stores, because I choose not to.
I have probably 15 grocery providers within 5 miles of my house. The issue for me is time and energy. We plan our meals around the specials at one store, and I go shopping at 2 stores across the street from each other: a megastore and a coop. That 1-2 hours/week (extra hour if with kids) plus a monthly Trader Joe’s run is as much time as I want to spend grocery shopping.
We cut back big dollars in other areas, and I can pick up side work for a good rate if I have spare time, so the additional time and energy to save $100 or so a month on groceries isn’t compelling to us. We just cut back and invest in areas that cost us less time and energy for more return.
Like I said, it’s a balance. If it’s worth it to you — by all means, do it!
April 29th, 2008 at 11:37 am
I agree with most of the posts above, however, in reading/skimming them, I haven’t seen anyone mention the problem for some of the “poorer, less educated” in navigating transportation obstacles to comparison shop or buy from several different locations. I apologize if I missed that point somewhere above. While I personally don’t have that problem, I imagine there are many out there who do, and especially for those trying to raise a family, who has an extra hour or two to commute by bus to save $5?
April 29th, 2008 at 11:42 am
I never comparison shop, but I’m trying to change my ways. My dad is a very conscientious consumer, and he just got an amazing deal on a giant flat-screen TV, just by doing his homework. He cross-compared prices from different retailers online, bought at just the right time, and also got a rebate, saving hundred$.
April 29th, 2008 at 11:44 am
Adding to Kristen’s point. This is great for people who live in densely populated places. Transportation and time issues for most folks mean get it while you can at whatever the price is. Don’t get me started on shopping around for services. Out in the country I’m lucky to find a contractor willing to bid on a small job let alone get two or three (or twenty!) quotes. That’s only getting worse as the price of gas rises and they want to find jobs close to home.
April 29th, 2008 at 12:03 pm
I saw a news clip online about a woman who views all retail price tags as negotiable. Learning how much money she saves has really opened my eyes to the likelihood of never paying full retail price again.
April 29th, 2008 at 12:07 pm
I also believe that certain things other than price can/should be taken in to consideration. A friend of mine worked part-time at a smaller chain grocery store (Schnucks, it is St. Louis based I believe) during college, and she was eligible for their health insurance plan had she wished to purchase it. I don’t mind paying an extra $.05 or so per item when I know that an employer provides decent benefits for their employees.
April 29th, 2008 at 12:57 pm
I huge factor involved in getting a good price on an item is being left out, in my opinion. Buying at the tail end of the products ‘new’ cycle. I did this with my TV and car and got great deals. If you don’t need the item immediately, wait until the latest and greatest is going to hit the market and you will get a good price on what will be a good upgrade for yourself.
April 29th, 2008 at 2:00 pm
I **always** compare products and then prices online… I used to use MySimon.com a lot, but now tend to go to Amazon.com.. If I’m looking for anything, I check to see what other buyers recommend… Amazon has a pretty good reply rate regarding opinions. Many times, I’ll buy something else based on the recommendations. Then i’ll check for a better price through Epinions.com or Bizrate.com, but often end up back at Amazon anyway…
Thx jegan
April 29th, 2008 at 9:15 pm
I was shopping around for a flight to Denver. I save $300 by flying out or Reno rather than Sacramento.
Comparison shopping is something I always do and it usually pays off. Some times it pays off big time.
April 30th, 2008 at 12:02 am
It depends on the price, your potential savings, and how much your time is worth, no ?
For low-cost items it’s frequently NOT worth it to comparison-shop, unless you buy them frequently or in large numbers. If you can get a $5 item for $3, you -did- save 40%, but you still saved only $2.
If your hourly wage is $30, then those $2 are worth all of 4 minutes for you. So not going to be worth it.
On the other hand, on expensive items it is VERY worthwhile to compare.
If visiting 5 car-dealers rather than 1 allows you to get the car you want for $30.000 rather than $32.000 then you save only 7% or something, but with the same hourly wages, the $2000 saved is worth 65 hours. You can ask for offers from 5 car-dealers using the phone in less than an hour.
April 30th, 2008 at 4:02 am
@Eivind: Savings on small ticket items is definitely worth comparison shopping. You buy small items most everyday, so $2.00 here and there ADDS UP. Examples:
1.) Food: By comparison shopping, taking advantage of sales, using coupons; you can save an average of $40.00 to $70.00 everytime you grocery shop. Monthly savings: $160.00 to $280.00! CHA CHING!
2. Small Item purchases: What might you buy for $5.00 or less in a month’s time? What if you saved and average of $2.00 per item by comparison shopping? Batteries, shampoo, conditioner, socks, underwear, cleaning supplies, office and/or school supplies, light bulbs, cup of coffee, lunch at the drive thru, etc, etc. What if you bought 10 of those items in a month? or twenty or forty? Add $20.00 to $80.00 in savings.
How often does the average person make big ticket item purchases anyway?
It’s the small everyday purchases that really add up big time.
I believe the average person/family can easily save $100.00 to $400.00 per month by comparison shopping on all their small ticket purchases. Just think, what would you do with that extra money????
May 1st, 2008 at 10:54 am
@icup
I’m a little late to this discussion, but I “subscribed” to a local organic farm here in NorCal a few months ago. It’s been great. It is a bit more expensive than the grocery store, and slightly more expensive than the farmer’s market. But (1) I don’t always have Saturday morning available to go to the market (2) I spend WAY too much when I go and (3) the box that comes sometimes has things I would not normally buy for myself, which has turned out to be great! I have greatly increased the veggies I eat, and learned to cook a wider variety of things.
For me it is about $21/week for a small box of mixed fruits and veggies. I made strawberry-rhubarb pie last night….tonight steamed asparagus.
I would encourage you to give it a try.