In this blog, I share some of the clever tactics that supermarkets employ to get us to spend more money without us really knowing it.
It’s important for kids to learn about the clever tactics used to get us to spend more for two reasons:
To save money: For every $100 we have, companies can adopt tactics that can lead us to spend it all (and more). If kids know about these tactics then they can be better prepared to save before they go shopping and therefore ensure they keep at least $10 out of every $100, i.e., follow the First Rule of Wealth.
To make money: If kids want to start their own business, they need to know how to sell and understand why people spend their money on certain things. Therefore, if they learn from the large companies who have spent millions researching this topic, they will have a big advantage.
On a related topic, I've written about how McDonald's uses certain tactics to get us to spend more money at their restaurants. You can read more about that here. At the end of this blog, I've added a bonus piece of content about how McDonald's' self-serve kiosks get us to spend more which I thought was really interesting.
How Supermarkets get us to spend more of our money
1. Fresh before the Junk
Supermarkets will put fresh fruit and vegetables at the front of the store. As we fill up our carts with these healthy foods, they know we will feel less guilty buying the tasty unhealthy snacks later on.
2. Large Trolleys (Carts)
The use of large trolleys/carts (especially in the US) means that when we buy the first few items it doesn't look like we've got that much (as the cart still looks relatively empty). We therefore have the impression that we haven't picked up enough and also not spent too much. Both of these mindsets lead us to spend more.
3. Store Layout
Supermarkets know that the more we explore the store, the more likely we are to be tempted to buy other items we hadn't planned on buying.
To get us to walk around the store, they strategically place the essential items (eggs, milk, bread) far away from each other. So whilst we might only want the essentials, we end up seeing many different items and adding them to our cart.
4. Expensive Items in Line of Sight
As we don't want to be constantly scanning up and down all the shelves, this means we are more likely to pick the items at our eye level.
Supermarkets know this and place the most expensive (or most popular) items on the shelves at eye level. This means we are probably all overspending on the items we want. If you want to reduce your supermarket shopping bill, start looking at the lower shelves as this is where you'll find the cheaper version (which is often just as good as the big brands).
Also, supermarkets place junk food and cereals which will appeal to kids on the lower shelves (at their eye level). They know kids will see them and work to persuade their parents to buy them.
5. Smells: We spend more when we are hungry
It is well known that people spend more in supermarkets when they are hungry. The supermarkets know this and look to give off smells (think of the bakery section -- mmmm!). These smells trigger us to start salivating and have the same impact as feeling hungry. We therefore end up spending more than we would have done otherwise.
Next time you go to the supermarket with your kids, mention the above tactics.
How to defend against these tactics?
One of the reasons I'm passionate about helping kids learn about money is due to these types of tactics used by companies.
Essentially, companies are spending millions, collectively billions, to find ways to get us to spend more of our money. On the opposite side, there is hardly any money being spent to help people avoid overspending.
It would be naive to believe that just knowing that these marketing tactics exist will stop us from overspending (although I do believe it will reduce the amount we overspend).
Here are three tactics to help avoid overspending which you should talk to your kids about:
Save before spending: Get them to put some money away as soon as they receive it. This money will therefore be out of reach from companies using clever tactics to get them to spend their money.
Tracking their money: What gets monitored, gets managed. If they get into the habit of knowing how much they are spending over time, they are much more likely to take action to control their spending. Help your kids start tracking their money with our free Money Tracker.
Shopping list: If you go to the supermarket with a list, you are less likely to pick up other items that you didn't intend to buy. As parents, if you do this, then it is more likely your kids will do the same when they are older.
Bonus: How McDonald’s self-serve kiosks get us to spend more
If you've been reading my blogs for a while, you'll know I use McDonald's to help bring money lessons to life with my kids. I was recently telling them that the self-serve kiosks have helped McDonald's increase the amount of money they make.
Whilst people might believe these kiosks just reduce their costs as they need fewer people working on the tills, the kiosks actually also lead to people spending more money (over average, people spend 30% more!).
Here's why:
Not being watched: When we are ordering from a till, there is a bit of fear of appearing greedy in front of the person serving. As the kiosk takes this fear away, we are happier to order that extra burger or ice cream.
Extra choices: A server can ask "Would you like fries with that?" but is unlikely to say "Would you like fries or an extra hamburger or some nuggets or an ice cream?" as that would be unnatural. However, on the screen, they can show all these options and therefore increase the chances we order something extra.
More time: There is a sense of being rushed when ordering at a till as someone is waiting to take your order. Assuming the restaurant isn't busy, there is more opportunity to take your time when ordering at a kiosk which leads us to spend more.
Summary: Money is like tennis
Recently I saw a social media post that used the analogy of money being like tennis. I thought this was really powerful and linked nicely with this blog.
Winning a tennis match isn't just about hitting winning shots all the time. In fact, most points are won by the other player making mistakes. The best tennis players hit lots of winners but they also make a lot less mistakes than the other players.
It's the same with money. It's not just about hitting winners (earning lots of money), it's about avoiding mistakes (overspending).
By teaching your kids about the tactics of supermarkets and other companies, they are less likely to make money mistakes that so many others make and instead, see their wealth increase as they grow up.
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P.S., Our best-selling money book for kids (6-12), Grandpa's Fortune Fables, uses stories to help your kids become great with money. Get your copy from Amazon.
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