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.
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.
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.
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.
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.
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.