Albertsons Pricing Game - overcharging buyers Azle Texas
Albertsons, like nearly all retail stores uses "rounded-up" pricing. The numbers game is costing the consumer millions of dollars in hidden overcharges. Just consider that the retail sales as given on US Governments web sites show monthly sales for retail food and beverage as close to $43 billion per month, or about 516 billion per year!
A review of printed flyers (in your newspaper) and store prices posted on the shelves show a large proportion of prices ending with 99 cents. A current newpaper enclosure published by Albertson in the Fort Worth Star-Telegram shows:
58 Prices ending in 99 cents
6 Prices ending in 49 cents
15 Prices ending with 9 cents
A database analysis of a typical wholesalers selling price to retailers shows a nearly even distribution of numbers ending in 01 through 99.
The question is: How do these skewed retail prices come about?
Manufacturers, distributors and wholessalers establish their selling price based on cost of goods, labor and overhead.
They establish a profit margin that allows them to operate and make a profit and stay competitive.
At the retail level the same pricing method should arrive at selling prices which are just as evenly spread over the last digits. Here is the numbera game:
Assuming that the pricing calculation comes up with a suggested sell price of $3.27. Will the price be adjusted DOWN to fit the $2.99 slot, or will it be rounded UP to the $3.49 slot. Common sense demands that the latter is done, else the item will be sold at a loss. For the comsumer all it means that effectively he/she will have paid 22 cents over the "true" price.
The same routine applies to sell prices that come up between 50 cents and 98 cents for the last two digits. Again, it is safe to assume that all of these will wind up in the "99" slot.
On the average, consumers will pay about 23 cents too much for each item they buy. A typical family weekly shopping cart will hold around 40 items, resulting in an overcharge of $8.80 per shoping trip, or about $457.00 wasted money per year per family.
I invite any representative of Albersons to discuss this matter and explain his company's pricing forthrightly and in sufficient detail to convince me otherwise.
Harry
Weatherford, Texas
U.S.A.
4 Updates & Rebuttals
Harry
Azle,Texas,
U.S.A.
Albertsons Pricing Game - Further Thought
#5Author of original report
Mon, March 01, 2004
I discussed the ramifications concerning the numbers game that was explained in the first Report, with a typical consumer I was told that under out free enterprise system a company can set prices any way they see fit.
Now comes the concept of competition. If company A chooses to jack up prices to the prevalent 99 or 49 level and company B does not, I would be a reasonable assumption that company A would loose business. But here is the rub: three blocks from Albertson is a food store named Brookshire. Across town is the food department of Walmart and a two more food retailers. They all use the same pricing scheme.
That, at least to me, sounds like price fixing and eliminating true competition. There is a case history were companies had to face legal proceedings. I can't prove it, but something smells fishy here. If a buyer cannot shop for the best prices, he probably pays too much.
Harry
Azle,Texas,
U.S.A.
Albertsons Pricing Game - Further Thought
#5Author of original report
Mon, March 01, 2004
I discussed the ramifications concerning the numbers game that was explained in the first Report, with a typical consumer I was told that under out free enterprise system a company can set prices any way they see fit.
Now comes the concept of competition. If company A chooses to jack up prices to the prevalent 99 or 49 level and company B does not, I would be a reasonable assumption that company A would loose business. But here is the rub: three blocks from Albertson is a food store named Brookshire. Across town is the food department of Walmart and a two more food retailers. They all use the same pricing scheme.
That, at least to me, sounds like price fixing and eliminating true competition. There is a case history were companies had to face legal proceedings. I can't prove it, but something smells fishy here. If a buyer cannot shop for the best prices, he probably pays too much.
Harry
Azle,Texas,
U.S.A.
Albertsons Pricing Game - Further Thought
#5Author of original report
Mon, March 01, 2004
I discussed the ramifications concerning the numbers game that was explained in the first Report, with a typical consumer I was told that under out free enterprise system a company can set prices any way they see fit.
Now comes the concept of competition. If company A chooses to jack up prices to the prevalent 99 or 49 level and company B does not, I would be a reasonable assumption that company A would loose business. But here is the rub: three blocks from Albertson is a food store named Brookshire. Across town is the food department of Walmart and a two more food retailers. They all use the same pricing scheme.
That, at least to me, sounds like price fixing and eliminating true competition. There is a case history were companies had to face legal proceedings. I can't prove it, but something smells fishy here. If a buyer cannot shop for the best prices, he probably pays too much.
Harry
Azle,Texas,
U.S.A.
Albertsons Pricing Game - Further Thought
#5Author of original report
Mon, March 01, 2004
I discussed the ramifications concerning the numbers game that was explained in the first Report, with a typical consumer I was told that under out free enterprise system a company can set prices any way they see fit.
Now comes the concept of competition. If company A chooses to jack up prices to the prevalent 99 or 49 level and company B does not, I would be a reasonable assumption that company A would loose business. But here is the rub: three blocks from Albertson is a food store named Brookshire. Across town is the food department of Walmart and a two more food retailers. They all use the same pricing scheme.
That, at least to me, sounds like price fixing and eliminating true competition. There is a case history were companies had to face legal proceedings. I can't prove it, but something smells fishy here. If a buyer cannot shop for the best prices, he probably pays too much.