In the world of grocery stores, it’s crucial to understand that these establishments aren’t just about food—they’re deeply involved in the real estate business. Dr. Eric Berg elucidates this concept, highlighting various strategies that grocery stores employ to influence consumer behaviour and maximize profits.
The information for this article is based on the knowledge of Dr Eric Berg DC, a chiropractor, health coach, and author based in Alexandria, Virginia. He has a YouTube channel with over 11 million subscribers in which he shares videos on various health and wellness topics, including fitness.
How EVERY Supermarket is Scamming You
Grocery Stores: The Real Estate Connection
Grocery stores are often perceived as purely food-centric businesses. However, according to Dr. Eric Berg, they are significantly driven by real estate. He states, “Grocery stores are not necessarily in the food business; they’re in the real estate business.” This foundational understanding reveals why these stores are meticulously designed to enhance consumer spending.
The Low Profit Margins and High Real Estate Earnings
Dr. Berg points out that grocery stores operate on thin profit margins, typically between 1% to 3%. Surprisingly, a substantial portion of their earnings, between 50% and 75%, is derived from real estate-related activities rather than product markups. This phenomenon, known as slotting fees, involves food companies or brands paying hefty sums to secure prime shelf space. Dr. Berg explains, “Food companies or brands spend a tremendous amount of money on getting certain locations in that grocery store.”
The Golden Zone and Consumer Manipulation
One notable strategy involves the ‘Golden Zone’—shelves positioned at eye level, which can boost sales of a product by up to eight times compared to lower shelves. Brands may invest anywhere from $10,000 to $1 million to secure this coveted space. Dr. Berg elaborates, “One product could spend between $10,000 to $100,000, up to a million dollars to get just one product on a certain shelf right in front of your eyeballs.”
Harvard Research Reveals: 3 Healthy Swaps to Processed Foods for Healthier Brain and Gut
Architectural and Sensory Tactics
The layout of grocery stores is another critical factor designed to influence purchasing decisions. Stores often have a counterclockwise orientation, catering to the 80% of people who are right-handed, naturally guiding them to look right and encounter more products. Additionally, sensory cues, such as artificial scents mimicking fresh bread or citrus, are strategically deployed to increase sales. Dr. Berg mentions, “If they pump out the smell of citrus, they can increase certain sales of certain products by 23%.”
Visual and Psychological Cues
Grocery stores also employ visual and psychological tricks. For instance, different colours are used to evoke specific emotions—blue to build trust, red to signal sales, and green to imply freshness. Social proof tactics, such as labels indicating a product is a bestseller or a customer favourite, can boost sales by 19%.
Creating Scarcity and Urgency
Another manipulation technique involves creating a sense of scarcity. By removing products from shelves temporarily, stores induce a fear of missing out, prompting customers to purchase items they might not have otherwise considered. Dr. Berg illustrates, “If you think about it, if you’re walking down the aisle and you just see like one product left and there’s nothing else, like hm, I better get that before someone else gets it.”
Checkout Line Impulses
The checkout line is strategically stocked with impulse buy items. Dr. Berg reveals a startling statistic: for every second a person waits in line, the likelihood of an impulse purchase increases by 38%. He notes, “16% of all of the sales, the total sales of a grocery store, is purchased in the front area.”
Loss Leaders and Endcaps
Loss leaders, such as milk placed at the back of the store, lure customers deeper into the store, increasing the chances of additional purchases. Endcaps, the displays at the end of aisles, are premium real estate within the store, often commanding high fees from brands for placement due to their visibility and accessibility.
The Deceptive Nature of Labels
Dr. Berg also sheds light on the deceptive nature of food labels. Products often boast claims like “always organic” or “no artificial flavors,” but a closer inspection of nutritional labels reveals high amounts of sugars and starches. He advises skepticism towards labels that seem overly positive, emphasizing the importance of scrutinizing actual ingredients and nutritional content.
5 Testosterone-Boosting Foods Men Must Eat
Consumer Strategies for Avoidance
To navigate these manipulative tactics, Dr. Berg suggests practical strategies: avoid grocery shopping when hungry or tired, stick to a shopping list, and focus on the store’s perimeter where fresh foods are typically located. He concludes, “When you buy that junk food, you then have to say no to it every day, every night. But if you say no right in the grocery store, you only have to say no once.”
In summary, grocery stores employ a myriad of sophisticated strategies to maximize profits through real estate ventures and consumer manipulation. By being aware of these tactics, consumers can make more informed choices and resist unnecessary purchases.
