Perception Matters

There’s a difference between being cheap and looking cheap.

The supermarket chain Loblaws had several different stores under their umbrella. One of which is a warehouse-style grocery store that caters to independent restaurants and accepts limited forms of payment. The store is, however, open to the general public.

Loblaws has a variety of these stores that appeal to those who want less of a polished product in exchange for a deal. There are deals to be had on select items (fresh vegetables that look less palatable, items bought in bulk, etc…), but overwhelmingly, most of the branded products cost exactly what they would cost somewhere else. Yet they have loyal customers that shop there all the same.

The chain’s flagship stores were originally made to look much more spartan than they do now. They’ve dressed it up some, and introduced a spectrum of stores of varying levels of ‘cheap looking’. Mostly this is accomplished by making the stores functional, but not installing features that make the space look nicer. The lights are a little more yellow, the floors are unpainted concrete, the shelves look a little more utilitarian and unfriendly...

Groceries are an item that have the two distinct markets. As part of a personal budget, food bills tend to be the first item on the chopping block. People sacrifice quality for price when money is tight. The opposite being those with more slack in their budgets that are willing to spend a little extra for brands that present themselves better, in stores that look a little more put together.

Loblaws embraced this ‘on a budget’ as their brand.

Really the savings are found on products with the lowest margins - vegetables, dairy, and meat products - the products typically found on the outside periphery of just about every store. This chain has it’s own ‘discount brand’ that comes in an ugly yellow packaging that leaves the customer with the impression that the price has been shaved down as low as possible.

Considering that the plastic packaging probably has a cost that is identical to premium brands, the fact that they have packaging that is meant to look less glamorous is telling. There is a perception of saving money, even though the reality is that many of the products sold here are at comparable prices in their competing chains.

It’s a reality distortion field.

For those eating truly on a budget, it doesn’t really matter where you buy your beans and rice from. These items are dirt cheap everywhere. But other more chique chains explicitly design their interiors to appeal to people that want more luxury. Yes, you will find more access to premium brands, but really the product that is for sale is the experience of being in the store itself.

You could sell sports cars out of a dimly light warehouse on the outskirts of town. It doesn’t make any difference once the cars are on the road - perception matters.

The ‘on a budget’ supermarket actually does very well for itself. They’ve done a very good job selling commodity foods under the impression that they are cheaper. Perception Matters.