Rethinking Brand Loyalty

In my first attempt to get lean and trim my budget, I am challenging my loyalty to my favorite brands. As I reflected on my budget and looked at ways to save, I realized that I many of my buying decisions were based on a preconceived bias.  

My pantry, cleaning closet and clothes closets reflect my favorite brands, which were decided simply by personal preference. While shopping, whether in the grocery store, discount store or at the local mall, I favored "my brands" and my demand for the products was relatively inelastic despite price differences or promotions on other similar products. I would grab items off the rack and shelf as soon as I saw the familiar packaging or label without a look or glance at the price tag or shelf label.

I had to pause and ask myself, "Why?". Do I value the brand, the ease of shopping, the connotation of the brand? Does the brand actually matter to me if I could save money buying another brand?

In looking at my budget, groceries make up a large part of that budget, and I'm sure that the same is true for you. According to the Bureau of Labor Statistics, as of December 2011, Americans spent 15.3% of their income on food. Given our dependency on food, I thought this was a great first place to start the brand loyalty discussion. Currently, I shop at SuperTarget weekly for groceries. I value the service, assortment, clean aisles and the ability to shop general merchandise while out for groceries (Note: the available general merchandise can be very dangerous to the budget too). In my new role, I am not sure these values are enough to keep me shopping at one store if deals can be found elsewhere.

With my retail background, I know the best way to compare grocers is to comp shop! I decided to shop Aldi as a representative of the low cost provider, Costco as a representative of the "bulk buying club" and SuperTarget as the general discount store to determine the best location to shop. In this trip, I focused solely on groceries. I will do a future trip focused on paper goods, personal items, cleaning supplies, etc. 

Overall Impressions

• Aldi: Amazing prices, minimalist presentation, busy/tight aisles, fewer product options (e.g. one sugar option), rarely carries national brands (coupons would be harder to use effectively here), and lacks organic and whole wheat products.
  Important to note: You can pay a quarter to rent a cart, which will be returned when you return the cart. Bring your own reusable bags, as Aldi does not provide bags. 
• Costco: Large product sizes, lack of overhead/directional signing, product organization is initially confusing (I am sure I would get in the hang of this quickly), visible and helpful employees, organic, wheat and niche product offerings.
  Important to note: You need to purchase an annual membership, which currently costs $55 in Minnesota. The product assortment is vast, even extending to gas, tires, electronics, etc.
• SuperTarget: Ad/Temporary Price Cut signing very visible in grocery, overhead signing is consistent and easy for direction (I am also most familiar with this retailer), helpful and available employees, some organic and whole wheat product offerings, but limited in Produce and Bakery).
  Important to note: You can save an additional 5% on everything by using your Target Visa, RedCard, Debit Card, etc. Cartwheel and Target Coupons also add to the savings - more to come in a future coupon post!

Comp Shop Method

I made a list of 17 basic grocery items and recorded item size, cost, and cost per unit at each retailer. I have a full list of this information, but I will highlight the total trip cost for one of each item in the available unit size (comparable if possible) and the overall unit cost if I were to purchase just one unit at each retailer, e.g. one ounce, one pepper, etc.
Note: I did not include coupons or credit card savings in this comp shop. 

The Bottom Line

• Aldi:
  • Total Unit Cost: $8.20
  • Total Trip Cost: $28.53
• Costco:
  • Total Unit Cost: $8.91
  • Total Trip Cost: $94.07
• Target
  • Total Unit Cost: $12.52
  • Total Trip Cost: $47.72

My Conclusions

• For my family size of three, Costco's sizing is too big. While their pricing is better on some items, particularly in dairy and produce, I am likely to let food go to waste by buying such large quantities. The total trip size nearly doubled the next closest option, which indicates to me that Costco could easily end up being the most expensive option if  we cannot consume everything we buy. In my eyes, Costco makes sense for families of four or more when there is more than one child over 10 years old. 
• As my family grows, this is something to continue to reconsider. 
• For a larger family, unit cost between Aldi and Costco was close, and if you only wanted to make one trip, Costco seems to be the best one-stop-shop. 
• Aldi's pricing is incredibly competitive, especially in produce and "stock the pantry" items. 
• SuperTarget and Costco both offer more organic and whole wheat product. 
• SuperTarget's product selection and sizing fits my family's needs, but I need to be selective on what I purchase at SuperTarget as unit cost can differ quite a bit, e.g. a Red Pepper at Aldi is $0.56 vs. $1.99 at SuperTarget.
• SuperTarget also offers Cartwheel, 5% RedCard savings and Target coupons - I am excited to share more in a future post, but I hope to use these additional offers to bring total and unit costs down for Target trips.

Next Steps for me:

• Change how and when I shop:
  • Biweekly planned shopping trips - lessen the frequency and be intentional with what I am buying. Do not shop when I do not need to - for me, more trips equals more dollars. 
  • Shop based on a meal plan - pick-up items that we need for the next two weeks for our meals, or pantry items that we have run out of along the way. No more grab and go! As I mentioned before, I grab products off the shelf based on brand. Now, I am going to be intentional about purchasing just what I need and shopping on price. 
  • Shop based on pricing - start the biweekly trips at Aldi where I will buy the majority of my list and pricing is most favorable. Next, shop at SuperTarget to purchase organics, whole wheat products and complete my shopping lists.
  • Do not sacrifice quality - one value I am not willing to compromise is product quality. While I was impressed with the overall quality at all the stores initially, I am going to keep an eye to quality during my shopping trips, despite my primary objective of price reduction. I am still shocked with the amazing savings at Aldi; I am pleasantly surprised, but I want to maintain a close watch to ensure this continues. 
• Coupons - explore how adding coupons and shopping weekly ads can further add to my savings and if those additions change how and where I shop. 
• Optimize - as I start to learn more, I will be able to improve and optimize my routines and increase my savings. I do not want to go back to a comfortable rut where I just buy my normal items without comparing prices. I will be sure to pass on future savings in upcoming blog posts.
  

I know this was very eye opening for me and I am so glad I paused rethink by brand loyalty and consider all my options to maximize my savings on groceries. How do you save on your grocery bills? Where do you shop and why? Please comment and share all your great routines!


Full Comp Shop Notes

     Key: Pink text highlights the best unit price across the three retailers