Battle for cash playing out in supermarket aisles

Grocery shopping only a minor expense? Think again.

The average American family of four spends $9,200 a year on food, rounded to $10,000 when paper goods and personal-care products are added to the mix. Overall, it's estimated that Americans spend $1.5 billion a day on groceries.

Yep, supermarket shopping is big business. And, there's a battle playing out in the aisles in front of you encourage you to spend more, according to a recent report by CNBC. In fact, stores are using both low- and high-tech tools to snag a larger share of the $500 billion a year business.

When a consumer walks into a market, they're being monitored. Stores are using brand-loyalty cards and video cameras to track your every move, analyzing buying behavior and figuring out what techniques inspire you to buy more.

For example, stores are doubling the size of their shopping carts. A recent experiment found that the average shopper buys 40 percent more with the larger carts. Apparently, size does matter. Also, newer stores are staying away from the typical straight aisles associated with old-school supermarkets and opting for a design that inspires shoppers to meander. Grocery staples—like milk, bread and butter-- are set up in the farthest corner of the store.

Other techniques like spraying produce and setting up the bakery at the front of the store are set up to appeal to the senses and ultimately entice patrons to buy more.

How can shoppers suit up and stay away from unnecessary purchases? Martin Lindstrom, a marketing consultant, offers several tips to outsmart the store.

His advice:

• Don't bring the kids with you when you shop
• Carry things in your arms instead of using a shopping cart
• Use cash instead of paying with a credit card

Click here for the lowdown.

Whole Foods sheds 'whole paycheck' label

Sales for generic brand groceries and other moderately priced goods are up as sales of just about everything else are trending downward.

That poses a problem for high-end retailers like Whole Foods who rely on customers willing to pay quite a bit more for the experience of shopping for their upscale goods at their stores.

Now that gourmet groceries are a luxury most shoppers are quickly cutting out of their budgets, Whole Foods must quickly reposition itself as a better value.

The New York Times reports stores are taking steps such as offering guided tours of good deals shoppers can find and displaying “weekly buys” fliers.

Andrew Wolf, an analyst for BB&T Capital Markets, tells the New York Times that Whole Foods was “a tale of two stores.” He says the grocery items in the middle of the store, dry goods such as cereal and pasta, are competitively priced.

The “outer items,” such as meat and produce, tend to be more expensive at Whole Foods, he said. That can be risky at a time when consumers are becoming increasingly price sensitive.

It’s becoming clear that this worsening economic environment is having an impact on consumers at all economic levels,” Mitchell P. Corwin, an analyst at Morningstar says. “The whole paycheck image can really hurt you.”

Whole Foods, however, does not want to risk losing a segment of its customer base to this image. Long an unconventional retailer, the company has decided to continue to pursue the value branding strategy. One part of the experience Whole Foods does not want to change is the high level of service customers have come to expect.

The next time you visit Whole Foods, ask a representative for a tour of the week’s best deals. You just might go home with a list of suggested recipes for tonight’s dinner.

Click here for the complete article.

--Bridget O'Sullivan

High costs drive up school lunch prices

Boston Public Schools are feeling the same squeeze ordinary consumers are experiencing with their grocery budget this year.

According to an article in The Boston Globe, city schools will raise the price of both breakfast and lunch by 25 cents at the start of the upcoming school year.

Due to the fact that about three quarters of students in the district qualify for free or reduced-price lunches, the savings will only total about $100,000 for the year.

Superintendent Carol Johnson defended the decision in an interview after the School Committee meeting.

“Every dollar we spend over revenue received has to come out of academic programs. We all regret increasing lunch prices, but the price of food is going up," she told the Globe.

A student can now expect to spend about $1.25 for breakfast and between $2.25 and $2.50 for lunch each day. The average price for public school lunch across the nation is expected to rise to $1.98 for the 2008-2009 school year.

The amount that federal government will reimburse city schools for each free lunch, however, has also gone up to $2.56.

In the wake of rising fuel and food prices and a growing emphasis on providing students with fresh, nutritious food, the increases are part of a plan to prevent expanding the school system’s budget deficit.

--Bridget O'Sullivan