Why You Should Shop Like a Chef

Still wasting money on branded products? Shop like an expert and save money instead.

Aug 10, 2014 at 12:00PM

Flickr / ericmcgregor.

When was the last time you bought a branded headache medicine, Like Tylenol or Bayer? Or do you always buy the store-brand version? What about baking soda -- do you choose the store-brand or the national brand? 

These might seem like inane questions, but a recent paper estimates that Americans spend nearly $200 billion per year shopping for goods that have an equivalent store-brand alternative. If everyone switched to the cheaper product (and assuming prices don't change), the savings would be about $44 billion a year. 

That's a lot of money for nothing more than a different package. Luckily, you can emulate a group of pro-shoppers: Chefs. 

Headache Medicines 
The researchers, hailing from the University of Chicago Booth School of Business and Tilburg University, found that information begets better shopping decisions: More educated customers are much more likely to buy store-brand painkillers than everyone else.


Flickr / e-magineArt.com

If the primary shopper in a household is a pharmacist or doctor, he or she is 15% more likely to buy the store-brand than the national brand. Similarly, knowing what the active ingredient in these various painkillers is increases the store-brand purchase by 19% relative to the norm. 

The price differences are actually quite wild when you look at them: Per pill, store-branded headache medicines cost about 26% of the price of the branded ones.

Placebo effect? 
Though the research in this paper doesn't extend this far, there is evidence that pharmaceutical advertising influences our beliefs about the effectiveness of drugs. I wonder if part of these shopping patterns reflect just that -- people choose national brands when they have a warm fuzzy feeling about their effectiveness compared to the not-so-nicely packaged and presented store brand. 

On the other hand, If you know that aspirin is aspirin no matter what the package looks like, this won't affect you so much. 

This brings us to the importance of reading the label. 

Flickr / lyzadanger.

Chefs: Label-reading pro-shoppers? 
Oddly enough, the study found that while pharmacists are really good at cutting past the marketing in pharmaceutical purchases, they're not so adept when it comes to buying other things -- like baking soda. 

In fact, they were no more likely to buy store-brand pantry staples than anyone else. Their powerful skills of discernment just didn't translate from the medicine aisle to the pantry section. 

Chefs, on the other hand, are 12% more likely to buy store-branded pantry staples, and they're also 11% more likely to buy store-branded headache medicines. So they're not quite as successful at buying aspirin, but their skills are somehow more universal.


Wikipedia / linsensuppe.

Why could this be? Maybe chefs are more cognizant of ingredients in general, and are thus more likely to read the label. Or perhaps they're more value-conscious about basics so that they can spend on luxuries -- we can speculate, but unfortunately it's impossible to tell what most chefs are thinking. 

One thing we do know: If you want to shop like Jamie Oliver, you'll be deploying your savings on basics toward the high-value, high-quality ingredients that matter. The chef advocates scrimping on staples, like canned or frozen vegetables (which are pretty much all the same), and splurging on things like high quality, organic meats.

This requires a level of insight -- or at least research -- into the difference between a prize like organic chicken and a commodity like cornstarch. Perhaps what makes a chef such a successful shopper is a level of curiosity that can be applied to many different things. Is the branded aspirin really different than the store-brand one? Is the discount beef the same as this grass-fed version? These are the questions you want to ask yourself. 

Waste not: Shop like a chef
The bottom line? You can waste an awful lot of money with brand loyalty. Instead, shop like an expert: Read the label and buy the store-brand where it makes sense (and it might not always, like our aforementioned beef).

You won't accrue the whole $44 billion in savings for yourself, but you could be saving yourself a whole lot of unnecessary spending. And now that your head no longer hurts, you could spend that money on more important things, like foie gras and truffles. 

Apple is going to change the way you shop...
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers