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What is a Grocery Store Loss Leader? How Does it Save Money on Groceries?

When I got on out on my own in the big bad world, I quickly learned that things cost money.

 Shocking, I know.

 I wanted to learn how to save money and eagerly dove in to read what everyone considers the epic and all time frugal living and money saving guidebook The Tightwad Gazette by Amy Dacyczyn (you can learn more about it here.) (Disclosure: I am including affiliate links for your convenience.)

 Despite the preachy tone in the later chapters of the book (when you can tell she admitted to be burned out on writing her newsletter in the 90’s) and a few of the now outdated tips (floppy disks!) there are still some decent frugal hacks in her book that are useful today.  For example, Dacyczyn’s  (she pronounces it like Decision)  greatest money saving tip is how to save money on groceries by only buying the Loss Leaders.

 Only problem is Dacyczyn doesn’t tell you what  a loss leader is and how to find them in the  store.

 

What is a loss leader sale?
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What a Loss Leader is, How to Find Them, and How to Save Money Buying Them

 It was a good ten years until I learned that the definition of a store loss leader store is simply when a store puts an item on sale at such a low price that they won’t profit or break even when a customer buys it at that sale price.  

 Examples of loss leader sales include:

  • Buy one get one free (also known as BOGO)
  • Buy one get one at half price
  • Buy ten specific items for  $10
  • Buy three specific items for $5
  • Seasonal sales on things like Halloween pumpkins, Thanksgiving turkeys, and BBQ items close to a summer holiday

 The low sale price are not because the item is poor quality or a scam. Loss Leaders are teaser products sold at a loss to the store to draw more people to shop at the store.  The store hopes that while you are there to get that great sale price on meat, produce, eggs, or milk (which are common examples of grocery store loss leader sales) that you’ll buy the rest of the groceries on your list  while you are shopping in the store at full price.

So while the store may lose a little money on a loss of a  perishable seasonal vegetable (which have a shorter shelf life and they need it to move more quickly than its canned or frozen equivalent) the store recoups that loss on the volume of full priced items they hope you put  in your shopping cart during the same visit.

 This isn’t a sneaky or nefarious business practice. All stores price some of the same products their local competitors sell at a higher or lower price.  That’s why many frugal and budget living folks also  keep a spreadsheet or price book listing the prices of the items they like to buy from several stores. It is an easy way to  know which store has the lowest price on a favorite item and if a competing store’s loss leader sale(or coupon or rebate) does or does not beat the lowest price. 

 

How Do You Find Store Loss Leader Sales?

You can find what a stores loss leaders are by simply reading the weekly store sales flyer (I read them on line.) Most of the time the really good deals like such as buy one get one free beef roasts or $3.00 carving pumpkins are listed on the front and back pages of the sales ad. Over time, you should start to notice sale trends or you can cut to the chase and read my post The Best Time to Buy Everything at its Lowest Price where I’ve done the work for you when it comes to finding seasonal items at their lowest price.

So basically, The Tightwad Gazette  says that you should only buy the loss leader sale items  and to not be fooled into buying anything at regular price unless you have a coupon (store apps generally have them) or an Ibotta rebate (you can learn more about easy Ibotta cash back rebates here)  in order to save the most money on groceries. It sounds like a great money saving idea but it takes a lot of work planning, organizing, and time doing multi store shopping trips to get every single thing you need to buy all the time.

Or at least is for me because not everything I buy goes on sale like the ingredients I use to make powdered laundry detergent (that still beats the price of any loss leader sale.) My last grocery shopping trip at Meijer confirmed that not every loss leader sale is less expensive than comparable items sold at the store such as store brands.

And then there are times when the prices at a discount grocery like Aldi or Lidl consistently beats the loss leader sale price. Aldi’s prices on the ingredient type food I use to cook from scratch often beat conventional grocery store loss leader sales. Although I try to use the loss leader/Ibotta rebate/rare coupon tip to save money on the things Aldi doesn’t sell or sells at a higher price. I'll also admit I still pop a higher mark up item into my cart because I do not have the time or energy to drive all over town to buy the lowest price on one the item on my shopping list like toilet paper. As always, your mileage may vary.

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Comments

Petra said…
Great tips and always good to keep in mind! Thank you for sharing at Fiesta Friday! :)
Richella Parham said…
I love that you explain exactly what a loss leader is! That term gets used often, and no doubt young people are thinking "What on earth?" I too was a big fan of Amy Dacyczyn.

Thanks so much for joining the Grace at Home party at Imparting Grace. I'm featuring you this week!