Wednesday, July 4, 2012

The More Complicated You Can Make Any Financial Transaction...

The more complicated you can make any financial transaction, the easier it is to rip-off the consumer.

I went to the grocery store the other day, which is usually not something I do alone.   I had a shopping list of things to buy, and I pretty much avoided buying stuff not on the list.   What amazed me was how so many items did not have prices marked on them, or on the space on the shelf nearby.  Sometimes you had to hunt for the price, and other times it simply wasn't there.

And I put a few "unpriced" items in my cart, and you can guess how that worked out.   Yes, they were scandalously overpriced.

But of course, Winn-Dixie has all these scams and schemes and promotions for prices.  To begin with, if you have a "frequent shopper card"  you get a discount off the marked price - to another marked price that is next to the retail price.   On a $12 bottle of virgin olive oil, the mark-down is $5.   Is there anyone who says, "Well, I guess I'll pay the full price, instead of getting a frequent shopper card" - is there?

And the second game is that you get pennies off on gas - only at the local $hell station - if you buy so many groceries.

The third game are "in-store specials" where the department manager marks down prices further, for loyalty club members.

Shopping alone, it was hard to monitor the prices as they are rung up on the cash register.   This problem is compounded by the fact that the price rings up at full retail, and then a "credit" appears randomly on the tape, showing the discount.

It wasn't until I got home that I realized that some of the in-store "specials" credits were not credited.  For example, shrimp was marked down to $8.99 a pound as an in-store "special" whereas the regular "special" price was $11.99 a pound, and the regular retail price was $13.99 a pound.

OK, it is just a couple of bucks.   But then you see that the "in store discounts" for deli meat and cheese are not applied, and well, you are looking at five or six bucks.

It is annoying - and most people are tempted to think, "Well, maybe I read the sign wrong" or "It's not worth the hassle to go back and ask for a refund."

One way to avoid this problem is to either write down these in-store bargains or set them aside in your basket, and watch as they are scanned.   Buying in smaller lots also allows you to check the prices as they are scanned.   Yet another technique is to go into the store with a list and a finite goal of how much money you want to spend - $20 or $50 or $100 - and add up your purchases as you go.   It is a great way to control over-spending.

But it illustrates how the pricing scheme is anything but transparent.   Like at a car dealer, there is a "sticker price" that no one pays, then a "discount price" that is their "regular" price, and then a discount below that, designed to entice you to put the product in your basket - but is never rung up properly.

And yes, on other occasions, I have noticed this and caught it in time, usually when buying fewer items.

The more complicated you can make any financial transaction, the easier it is to rip-off the customer!

And this is not even taking into account the biggest aspect of this scheme - the fact that most consumers compare the "discount" price to the "regular" price as an indicia of savings.

For example, I went to the Publix the other day.   This is a Georgia Publix, not a Florida Publix.   A Georgia Publix is like the hillbilly cousin of its sophisticated Florida kin.   You get the idea.

But the prices are still as high as the Florida version, and I was amazed to see at the deli, how everything was literally 50% higher in price than at the Winn-Dixie.   But people were still buying, enthusiastically noting how the cheddar cheese was "on sale" for "only" $9.99 a pound!   By comparing the phoney "sale" price to real market prices, they failed to realize they were overpaying by as much as 50%.   The same cheese at another store was only $5.99 a pound, "on sale".

The marketplace is a battlefield, to be sure, and it has always been thus.   When I was a kid, it was S&H Greenstamps, instead of free gas.   We were supposed to collect these and paste them in a book and redeem them for a toaster.

Or, if you bought so many groceries, you could get a free plate, and eventually have a whole dining set!  And yes, my Mother did this - and ended up with a dozen plates.  

When they offer these ancillary deals - or phoney discounts from inflated "retail" prices, it distracts the consumer from the underlying transaction.   Yet few places don't engage in these kinds of promotions.   Wal-Mart at least, doesn't have a "Frequent Wal-Marter Card" just yet.   But wait for it.

I will go back to Winn-Dixie with the receipt and the sticker from the purchases that did not ring up properly and get my $5 back.   It is a hassle, true.  But marking things at one price and selling at another is outright fraud.