Joined: Mar 2009
Posts: 5039
It's like "free shipping"
9/19/2016 at 1:38 PM
Like you say, it's an awareness of marketing ploys that get you in the door, and get you spending more than you planned.
It's like the free shipping scheme on places like Amazon. Great deal for some people especially for large-ticket items, but studies have found that most people who buy something on Amazon will only spend $20, and most items will ship for $5-7.
But by setting the "free shipping" price point at $35, they encourage people to spend more to get the free shipping - not a whole lot more because then it's not attractive - but enough that they get those few extra dollars out of most customers.
You also have to keep in mind that shipping costs are not necessarily the cost of shipping. There's profit in that too. Case in point - I often buy used books at betterworldbooks.com. They both sell on Amazon and on a stand-alone website. On Amazon, they sell most books for a penny plus shipping (typically &6.95). On the stand-alone site, the identical book (literally, it's the same used copy of an out-of-print book!) is usually a bit more when not on sale, but with free shipping. It's typically cheaper for me to buy it via Amazon unless the stand-alone site if having a flash sale, and clearly it's profitable for the company to sell a book for $0.01 + shipping.
Superstore *does* sell lots of stuff other than groceries, but how much does the average consumer spend, as a proportion of dollars spent, on fully taxed items? I can confidently say that if I'm spending $250-$300 (not uncommon when I do my once-a-month big shop), less than 10% will be fully taxable items. I don't need a new crockpot every week, but I do need carrots on a regular basis. Carrots, not crockpots, will be their bread-and-butter. It's marketing, pure and simple.