If you’re like most Americans, you’ve probably seen signs at the grocery store that say, “Buy one, get one,” “Buy one, get one half off,” or “Get four at $2.99 each.”
This is a concept called “spaving,” a common marketing tactic designed to get consumers to spend more without realizing it, perhaps even more than they originally intended.
Spaving plays on customer emotions, invoking an impulsive reaction to buy now because even the most disciplined shopper may be unable to pass up a seemingly good deal. In some instances, the price-cutting promos work great for the consumer, but often times “spending more money to save money” does not make sound financial sense.1
The chart below shows that food prices have decreased since mid-2022 as companies have gradually resolved food production costs, labor costs, and supply chain issues resulting from the pandemic. The Consumer Price Index for “food at home” has been tracking right around 1% this year, but it’s important to keep in mind that this recent price stability does not offset food inflation in 2021 and 2022.2
Retailers are starting to feel the heat from bargain hunters, too. In fact, in recent weeks, Target, McDonald’s, and several others have cut prices due to shoppers become more selective about spending as their budgets get squeezed.3
I work with several clients who have felt the pressures of inflation and needed to adjust their budgets accordingly to keep up with these rising costs. Some are retired and simply require more spending money and others are still planning for retirement but might be unable to contribute as much as in years past.
So, if you are feeling the pinch, please reach out. Sometimes, even the slightest change can make a big difference.
1FoxBusiness.com, May 19, 2024. “Finance expert sounds alarm over ‘spaving’ trend: An old ‘trap’ with a new name hitting your wallet.”
2NerdWallet.com, May 15, 2024. “Food Prices Stayed Flat in April. Groceries Actually Declined.”
3CNBC.com, May 22, 2024. “Why Target and McDonald’s are cutting prices and offering deals.”