Another Grocery Store Bites The Dust

Wheee! It was just a matter of time, I suppose. Our closest Albertsons is shutting its doors next month. Why? They aren’t a “mom and pop” store that just couldn’t keep up with the big guys. They are a big guy. At least they were until the stores started closing last year. From our perspective, their downfall could have been easily predicted. In my opinion, they were charging more without giving more to the customer.

When I think of non-specialty grocery stores I think of three major categories:

Expensive but have unusually good sales on select things (Albertsons, Randalls)
Moderately priced with good, solid weekly sales (HEB)
Low priced with very few sales (Walmart)

Obviously, Albertsons is at a disadvantage in the sense that they were competing against the moderate and lower priced stores. But high priced grocery stores succeed all the time in this town (as confirmed by my pricebook).

Albertsons has higher prices than the “moderate” stores on practically everything. Their strategy is to run loss leaders like “10 for 10″ specials to get you in the door. They must be counting on the convenience factor as well because they have a good location right off of a busy highway.

Randalls also has high prices on their products. In fact, even higher than Albertsons when you compare them. Their strategy is advertising weekly loss leaders (with multiple restrictions) and double or triple coupons on the first item (no stocking up with coupons). The store has a good location nestled in a middle class residential area. They seem to be doing well, despite having the highest prices around. I often have to suppress the urge to laugh uncontrollably at some of the “sales” they advertise.

So why do we think Albertsons is closing while Randalls is doing fine?

Layout and Ambiance

Albertsons: The first thing I see when I walk into Albertsons is a lackluster display table of sale items and rows and rows of aisles. There is no fresh food in sight. Just aisles of packaged foods. The fresh food areas are in the back corners of the store. I like to see the fresh items when they enter a store, whether it is baked goods, produce, meats, even floral. Fresh food is what makes people “ooh and ahh” - not boxes of cereal or cans of soup. Attractive presentation makes us think that the store is “upscale”.

The lighting is strange and the displays are sloppy. The lack of design or decorative elements makes it feel like a discount store. Nothing about it says “I’m worth the extra money you are about to pay”. Why am I paying more to shop at a place that feels like it should cost less? This is where Randalls got it right.

It's all about the produce, produce! Randalls: This store has the deli/prepared foods counter and a large Starbucks kiosk immediately in front of me as I walk in. The fresh coffee smells familiar and comforting. Beyond the deli (with fresh artisan sandwiches on display) I see the fresh bread. The aisles are in the middle of the store so they are not “front and center” as I walk in. When you enter the other side of the store, you see the fresh floral and produce. Either way I am greeted with lovely things to look at. This sets the mood.

Randalls has a warm, inviting, “upscale” feel. It’s very nicely appointed with professional displays and artsy signage. You immediately know it is an expensive store because it looks expensive. My expectation is set from the beginning. At least if I decide to shop here and pay more, I feel like I get some sort of perceived benefit - a pleasant shopping experience in a beautiful store.

Products

Albertsons: Although Albertsons does have a butcher, he is hidden in the back corner where he is not easily accessible. Most meat items are prepackaged and don’t look all that “fresh”. The veggies and fruits tend to look average and the selection is limited. It is clear that this store isn’t focusing on the fresh aspect of their business, but instead it is targeting all the prepackaged foods available in the aisles. The problem is that prepackaged foods are consistent wherever you go; it’s the fresh food that makes me decide if I will shop there or not, regardless of price.

Randalls: Randalls seems to be using their fresh food to anchor their higher prices. They have a decent selection of produce and it is all well cared for and appealing. Their meat, although mostly prepackaged, looks bright and fresh. They have a butcher working behind a case full of fantastic looking proteins. They even offer Black Angus beef, which helps set them apart as higher quality. I get the impression (right or wrong) that their fresh food might be worth the extra cost. If I’m willing to shop here for my fresh food I’ll likely stay and shop for my other goods, too.

I actually don’t shop for regular groceries at either of these stores. I only shop there for their loss leaders because everything else is just too pricey for me. It is clear that Randalls offers double or triple coupons because their prices are high enough to absorb the extra costs. No other grocery stores offer that in my area.

It appears that while Randalls is charging more, they are offering a higher level of ambiance and product quality to help “justify” that cost to the consumer. Albertsons didn’t give that something extra and just demanded higher prices. I think the perks are what keeps Randalls going when people have cheaper alternatives out there. Without those advantages Albertsons is just an overpriced “discount” grocery.

I have to wonder, based on my observations, if Albertsons was ever trying to compete with the higher-priced “upscale” grocery stores. They certainly have the prices but not the perks that I’d associate with that level. Maybe they were aiming to compete with the moderate stores that don’t offer the “frills” but their business model forced higher prices for some reason. I’m not sure.

What a shame. I have found some excellent loss leaders at this store and I will miss that. The revenues they get from loss leaders alone are not going to be enough sustain a store. Quite simply, if you’re going to be charging higher prices, you better be offering me something more.

Cart image by KitAy — Produce image from Daniel Morrison

Using Credit Cards Online

This article is part of the Securing Your Money Online series.

Let’s face it, some of the best deals you’ll find on the stuff you need (or want) can be found online. You could find yourself shopping all over the Internet at online stores you’ve never even heard of before finding fantastic bargains. But then you have to wonder if the sites are legitimate. Do they have good security? Will my credit card information be safe?

There are things we can do in the virtual world to protect ourselves from credit card fraud. You’ve probably read a story or two about credit card information being stolen from an online store. In some of these cases, hackers were able to break into the store’s databases by exploiting various insecurities in the shop’s website or network setup. In other cases it could have been an employee stealing this information. Either way you could be at risk. If you shop online and you use a credit card for purchasing there are ways to minimize the impact. One of those ways is to use virtual credit cards.

Virtual credit card numbers, also called one-time use, single-use, controlled payment number, or disposable credit card numbers, are an easy and effective way to help avoid the hassle of dealing with fraudulent charges. A virtual credit card number is basically an alias for your real account number, keeping your real account number private. If that store happens to get compromised, they won’t even know what your real account number is. Your virtual credit card number can be customized to restrict the credit limit or expiration date.

Depending on your bank, you may or may not even have the option to use a virtual credit card. If you shop online, I recommend you look for this feature when you are evaluating credit cards. My credit card is with Citibank and they support the use of virtual credit card numbers. Other banks, such as Discover and Bank of America, also have these capabilities with their cards. With Citibank, you can use their software applet in Windows to create a new card, or their online web interface if you need to generate a card number with a Mac or Linux box.

Generating a virtual credit card number is simple. Here is a short example of using a virtual credit card generator, specifically Citibank’s version.

Using a Virtual Credit Card Generator

After you login, you will get a screen which shows you all the options available, including viewing past cards and generating a new card. We start by clicking on “Generate Virtual Account Number”.

If you click “OK” on the next page, Citibank will generate a virtual credit card number with no spending limit which expires the following month. I rarely use this option. Instead, at this menu I select “Advanced Options” at the bottom.

With the “Advanced Options” menu, you have two options. You can create a card with a spending limit (which I always set) or you can create a card that has a spending as well as a time limit (which I select for cards I am using for recurring expenses such as Vonage).

Once you generate a card, you get the 16 digit card number, a CVC (3 digit card verification code), and the expiration date. If you are using Windows and the Citibank applet, you can have the applet automatically enter the payment information into the shopping checkout form you have up in your browser.

Although the example uses Citibank, Discover seems to use the same software (according to Wikipedia, they both use Orbiscom).

You may be thinking, “but why would I do this when I’m not liable for fraud on my card anyway?” For me, this feature adds peace of mind. If a virtual credit card number is stolen, I can look back at the logs and see exactly which merchant I used that card to purchase from. On top of that, they are restricted in how much they can charge due to the limits I set on the card. I don’t have to worry about someone maxing out the card and screwing up any automatic charges I have set up on it.

Using a Debit Card Online

If you normally use a debit card, I highly recommend you don’t use it online. Not only is this tied to your banking account with your real money, these cards don’t always offer the same protections as credit cards. If someone gets a hold of your debit card information and manages to spend all the cash from your bank account, you may be unable to access it until the bank finishes their investigation into the matter. It’s your money on the line, not necessarily the bank’s.

If you aren’t using virtual credit card numbers for your own online shopping, I highly recommend you give them some serious consideration. Now I feel I can be even more frugal by selecting the best deals I find online without having to worry as much about my credit card number being stolen. If you don’t have a card with one of these banks, or can’t use virtual credit card numbers for some reason, my recommendation would be to avoid using your credit card online except for at established online stores. In the end, you should only be liable for a small amount, but dealing with the hassle just doesn’t seem worth it to me. You can make your own decision as to how much risk you are willing to take with your credit card. We’ve got a friend who’s had her credit card number stolen 3 times from online stores. 3 times. Now, she only uses virtual credit card numbers online. For me, it’s a feature that is indispensable and I wouldn’t shop online without one.

Virtual credit cards - don’t shop online without one.

You Better Shop Around: Getting The Best Deals On Groceries

I used to get a sort of elation from shopping online. I would get excited about finding new and interesting things. Now that I’ve made the commitment to be more frugal, I get this same elated feeling combing the grocery store deals and finding the best price for tomatoes. That’s something I never expected. Shopping has turned into a game of some sorts now and it is all about finding the best deal. I have channeled the same energy and excitement I would have when buying big ticket items into my quest for sales on the everyday items.

I actually enjoy reading the flyers to identify good offers and I get a good laugh when I spot an advertised “can’t miss” deal when it isn’t a deal at all. Not even close sometimes! Sometimes, the stores will make it hard for you to spot their deception by lowering already inflated prices a bit and making it seem like a bargain. I view it like a challenge. The best deals I have found on groceries are when you get a genuinely good sale price and pair it with a coupon. Here are some tips on how to get the best deal when grocery shopping.

Start a price guide. List the top 20 items that you commonly use in your home. Go to each of the stores that you are likely to shop at in your area and write down their prices on the identical items and the generic equivalents. Adjust the price appropriately (in ounces for instance) if the sizes don’t match. Keep this notebook around for reference. That way, when you see a special on tuna for 2 for $1 you will know if that is actually a good deal. Often pricey stores have seemingly good deals but with a little investigation you might find their specials still result in a higher price than a competitor. I know it may seem like a lot of work but that one afternoon of scouting increased my confidence in knowing when I see a good deal. This tool will help you maximize the “best of the best” deals by helping you see when it’s time to stock up on a good deal.

Get coupons. A lot of people recommend just buying the store brand to lower costs, but often you can beat the price of a store brand by using a good coupon on a national brand and combining it with a sale. I get my coupons from the Sunday paper and also by checking out some online coupon sites . My goal is try and find a coupon or good deal for every pantry item I intend to purchase. Produce and fresh meat coupons are rare but pantry items often have coupons floating around out there.

Drop your brand loyalty. By dropping your brand loyalty on everything but the items you truly feel are superior to the competitors you can save the most. If you are willing to switch to Palmolive instead of Dawn when they have a sale with a matching coupon you will increase your savings dramatically.

Pay attention to the junk mail you get. Nearly everyone gets flyers in the mail for the local grocery stores with the upcoming sales for the week. Our flyers come in the mail on Tuesdays and Wednesdays. Study these flyers to see what will be on the sale that week. Many times the items on sale will match up to the coupons you got in the recent Sunday paper. This is when you can start getting the really good deals.

Find the “loss leaders” at the expensive stores. “Loss leaders” are really good sales that the stores use to get you through the doors. Identify these items and if it is something you need AND you have a coupon for, then it’s time to stock up. I only buy the loss leaders at these stores; most everything else is too expensive.

Don’t be afraid to shop at multiple stores. This is a good rule of thumb, as long as they are close by and don’t just add to your gas expense. It is unlikely that one store will have the best prices on everything. By looking at the flyers you can identify good prices on items at stores you might not otherwise patronize. Take advantage of those good deals, especially if you also have a coupon for the item.

Sometimes online is cheaper. See if online stores like Amazon have better deals on non-perishables, especially if it is something that rarely goes on sale or has coupons. For example, we love Inglehoffer sweet-hot mustard. This mustard never goes on sale and I have yet to find a coupon for it. I needed to find a better deal to justify spending more to keep this particular brand allegiance (and if you try this mustard, I think you’ll know why). I was able to find a good price on Amazon and bought it in bulk. We saved a significant amount that we otherwise would have been unable to do because it is specialty item and doesn’t seem to have any discounts.

Overall, the goal should be to avoid paying full or premium prices on just about everything. Sure, it takes a little effort but the payoff is definitely worth it. Not only do you get that great feeling of knowing you got the very best deal on your purchases but you save a chunk of change in the process.

Keep in mind though - there are limits. Your time is worth money, too. It is not such a good deal if you spend 3 hours trying to save $0.25 on a bag of chips. Don’t give up – it just takes a little time to get in the swing of things. Once you establish a price guide, a coupon file, and get a better idea of how to spot truly good deals, saving money will become quicker and easier.