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DOLLAR STRETCHER
Secrets Save 25% on Groceries

by Gary Foreman (gary@stretcher.com)

Watching a professional work can be a real learning experience. They know just how to get the most out of their efforts. For instance professional buyers know a few secrets that could reduce your grocery bill by 25%. And it doesn't take years of training to learn or apply these secrets. You can start using them on your next trip to the grocery store.

So let's go behind the scenes to see how the pros go shopping. The first question that our purchasing agent asks is how much of a particular item will be used. They may rely on sales forecasts, past usage or computerized forecasting models. Sometimes the projections can by very inaccurate. This makes life hard for our purchasing agent.

Fortunately, you have more control over usage than our buyer does. Sure, your teenager might invite a couple of gluttonous friends over for dinner. But, for the most part, you have control over what you'll serve and when. You can control how much you'll need with a menu plan. No rocket science here. Just decide what you'll make for each meal for the next week or so. Take a look at the list of ingredients and figure out what you'll need to make each meal.

Next our professional wants to know how much of each item they already have in stock. For a retail store or factory that can be tough. There are multiple inventory locations for many items.

But, for you it's easier. If your pantry shelves are organized a quick glance can tell you how much you have. A running inventory of common items can be kept on a clip board or note pad. Take it with you to the store. Shopping without checking your 'inventory' first will cost you money.

Suppose our pro decides that it's time to buy more. One key element is how much time does he have before running out. If something is needed 'right now' price considerations become unimportant. Speedy delivery is essential.

What does the buyer like best? To be able to make their purchases when there's plenty of time available. Then they can price shop. Use their negotiating skills to get the best deal.

You face the same situation in your grocery shopping. Out of milk? You'll stop at the quickest place on the way home from work. Getting the best price is not important. Convenience is. And, like the buyer who pays extra for overnight delivery, that special trip to the store costs you time and money. The lesson to be learned? Buy commonly used items before you run out.

Back to our buyer. Before spending any money it's important for them to check the 'buy history' for the item. It shows past purchase information. A pro wouldn't dream of relying on their memory to know what they paid in the past. Smart buyers will use that history to spot trends in prices or identify seasonal fluctuations. They'll also check to see which supplier offers the lowest price for that item.

You can accomplish the same thing with something called a 'price book'. A simple loose leaf notebook will do. Keep one page for each frequently purchased item. Include columns for the date, store, brand and price of the item. Make entries any time you find a new lowest price or a change in pricing.

The price book will come in handy a number of different ways. Once you've assembled your shopping list you can compare it to the book. You probably don't have time to go to more than one store. So take a look at your book to see which store is cheapest on the items that you need this week.

When you're shopping you'll use the book to spot bargains. We all love a sale. But sometimes it's hard to remember how much we usually pay for an item. With your price book in hand you'll be able to know when you really have found a bargain. If it's a commonly used items it's time to stock up.

Our professional purchasing agent is also aware of something called "Pareto's Law". It's named after an Italian mathematician. Our buyer sees many requisitions every week. He can't spend a lot of time on each one. And, fortunately, he doesn't need to. But, it's very important to know which ones should get the most attention.

That's where our friend Pareto comes in. He discovered that 20% of the items accounted for 80% of the total dollars spent. So our buyer pays attention to that 20%. Those will be the items where our buyer will make extra calls to get a better deal. Most other items are handled fairly routinely.

OK, so what does that have to do with your shopping cart? Like our purchasing agent, your time is limited. You can't comparison shop every item on your list. So pay attention to the high cost items. For most families meats will fall within that category. Vegetables might, too. Check your own buying patterns and see where the big money goes. Then pay particular attention to those items.

Our professional buyer gets one report that he doesn't like. That's the 'excess report'. It lists items that were purchased but not used. They're sitting on the shelf and tie up cash. Not much the buyer can do here.

You probably also have a few items in your pantry that have been there long enough to collect a layer of dust. Again, you have an advantage over the buyer. You can look for recipes that will use that inventory.

Finally, our buyer will get a 'variance report'. He'll learn which purchases cost more than expected. Some buyers are actually rewarded based on how well they do. But, even if they're not, a good purchasing agent looks for items on the list that could provide potential savings next time out.

You can do the same thing. Your grocery budget provides a variance report. Did you spend more than budgeted or less? Your price book will also give you clues on where to find savings.

There's no formal training or expensive tools required to begin using the techniques that the pros use. All you need is a notebook and a determination to save on groceries. The benefits can be significant. So the next time you visit the grocery store think like a pro!


Gary Foreman is a former Certified Financial Planner and purchasing manager. He currently edits The Dollar Stretcher website http://www.stretcher.com You'll find hundreds of free articles to help you save time and money. Visit Today!

ISSUE 17 MAY - JUNE 2000
I S S N   0119-7088

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This Month's Secret Assets
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Gary Foreman
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