Apparently, people won’t pay $6 for butter

13Jan10

On Sunday, I went to the convenient (but incredibly overpriced) grocery store nearby to pick up a few random things. I only shop there a few times a year, because the prices for most things are outrageous, and the customer service is rather poor. During my recent visit, I was amazed by the high prices of several items. In particular, a pound of butter was over $6, and so was a half-pound container of grated parmesan cheese.

Those prices are much higher than a few years ago, when the butter and grated cheese each cost $3-4. I had no intention of buying either product, but I did notice something interesting about them. Right next to the expensive, name-brand butter and cheese, the store had added a cheaper brand that I’ve never heard of, priced around $4.

What happened here? Why did they suddenly decide to add a cheaper option after years of price increases? My guess is that the name-brand suppliers kept jacking the price up, leading to a retail price of more than $6, which in turn caused many customers to stop buying those products. Instead of lowering their margins on the brand-name products, the store decided to get a cheaper option for more price sensitive-shoppers. Whether this strategy is working is anybody’s guess. But at least they’re making an effort to provide reasonably-priced options.

Will I be shopping there more often now? Not a chance. Trader Joe’s still kicks their ass on every product imaginable. Even the $4 off-brand products can’t touch the Trader Joe’s price of $2.79 for butter or grated cheese. But for the average shopper in my neighborhood, who I suspect pays about 2-3x more than I do for groceries, the lower-priced options in the local store will be a welcome change.



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