Most people might not believe that they are being tricked by grocery stores and here is the reason why. Going grocery shopping is one of those things we usually don’t give much thought to. We grab our shopping list, choose our cart, walk around the store, pick out the food we want, pay, and leave.

But the true is that every supermarket is a well-oiled machine, hell-bent on getting you to spend as much money as possible without even realizing it. They’ve got a few tricks up their sleeves to make sure that happens.

The typical supermarket sells more than 50,000 items, and getting them onto the shelves, keeping them in stock, and selling them before they expire can be a Herculean task.

Some of this items include meat and the deli counter on one side, fresh fruit and vegetables on the other, bread in the corner, eggs, and dairy in the back, and packaged goods taking up the shelf space in the middle. And while it might all look like chaos, the layouts are actually very scientific, and everything is where it is for a reason.

But the questions that you might be wondering about now is, what are these tricks, and how do these grocery stores make money in the first place? Find the answers below.

• How do Grocery Stores Work?
• Are grocery stores profitable?
• What is The Most Profitable Item in a Grocery Store?
• This is How Your Grocery Store is Tricking You Into Spending More Money
• Why do Supermarkets Move Things Around?
• How Often do Grocery Stores Change The Layout
• How is a grocery store organized?

How do Grocery Stores Work?

Grocery stores typically have a very low-profit margin (some as low as 1-2%). So they make their money in volume by selling large quantities. They also try to minimize shrink (theft and spoiled products) and keep labor costs as low as possible, often by hiring more part-time employees (who get fewer benefits).

Grocery stores, when staffed with the right people, run like a well-oiled machine.

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Grocery stores provide a service. They don’t typically sell a product of their own unless they have a large prepared foods section. Rather, they buy existing products from distributors for stocking their local stores to sell to customers.

Once those products make it to the local store, it’s up to that store’s manager and team members to provide the services and resources that attract new customers and retain loyal ones.

Grocery store managers are responsible for all aspects of running the store. From supervising employees to maximizing profits.

They are the conductor of the orchestra if you will. If one part of the store falls apart, the rest of the store suffers.

In turn, if the store doesn’t have a good leader, the whole thing falls apart. So the manager is responsible for not only keeping the team together but the store running smoothly.

Grocery store managers are responsible for hiring and training employees.

They look for employees that can be trained to be the best in their department. And they also communicate with their employees to discuss potential stocking issues, answer questions, and address any staffing needs.

Lastly, they also need to think about what makes a good grocery store.

Good grocery stores have decent parking, even when the store is busy. They also have nice, wide aisles and competitive prices. They have properly staffed checkouts and an atmosphere that makes you want to hang out and shop.

Are grocery stores profitable?

They can be, and if you think about a grocery store you usually think about a chain. You probably think about Publix, Whole Foods, or even Walmart. Typically, when you think of a chain of any kind of store, you probably think they make a lot of money.

And those conventional chain stores are pretty profitable. But not in terms of a profit margin; just gross dollars. In fact, conventional grocery stores only make 1-2% bottom-line profit. Compared to other kinds of businesses, that’s pretty low.

But stores like Whole Foods Market may actually generate a 5-12% profit.

However, for small independent grocery stores, 1 to 4% is more typical. There are also a lot of factors that affect independent owners more, such as marketing, product costs and shrink.

Because smaller markets sell so much inventory, typically don’t give out free samples, or usually have an in-house butcher, 1-2% profit margin is pretty good.

Think about it this way.

If the average Safeway does $1,000,000 in sales per week, that means $20,000 per week profit, max. That adds up to a little over a million dollars profit per year for that one store.

Smaller mom and pop stores might be closer to 10-12% profit margins, but they likely won’t do as much in sales, which means much lower profit.

What is The Most Profitable Item in a Grocery Store?

Grocery stores have some of the lowest profit margins in the retail landscape. Typically, food products get marked up much less than other merchandise, like apparel. However, when it comes to figuring out which things are marked up the most, the true cost of goods may surprise you.

1. Non-grocery items

• Markup percentage: 40-50%
• What to buy instead: Shop for these items elsewhere

Need lightbulbs or lawn furniture? It might be more convenient to just grab these items during your weekly grocery store visit but doing so will almost always come at a cost.

That’s because non-grocery items are typically priced higher in the grocery store than they are at other retailers like Walmart or Amazon. Shopping around for these items will save you significant cash (even if it does take a little extra time).

2. Prepared foods

• Markup percentage: 40%
• What to buy instead: Frozen meals

Most grocery store marketers understand that people are in a hurry. One way to save time? Stopping by the store to pick up a dinner that’s already cooked. However, choosing this type of meal can be unnecessarily expensive.

You’ll spend a lot more on prepared foods than you will on frozen food items that take a few minutes to prepare. Again, your best option is meal planning in advance. In a pinch, a rotisserie chicken is a cheaper alternative to other prepared foods in the supermarket.

3. Cereal

• Markup percentage: 40%
• What to buy instead: Generic brands

The cereal aisle can be overwhelming with all the colorful boxes and options. Name brand cereal often comes with a high markup and it’s not always worth it. Try saving money by switching to the generic store brand versions of your favorite cereal or at the very least shopping with coupons.

4. Over-the-counter medications

• Markup percentage: 30-40%
• What to buy instead: Generic versions

You might notice a theme – many items can be purchased more cheaply if you’re not married to the name brand version. Generic over-the-counter medications like cold and flu formulas or pain relievers often contain the exact same ingredients as the name brand versions. They just cost a lot less.

5. Cosmetics and beauty supplies

• Markup percentage: 50%
• What to buy instead: Buy them elsewhere

Yes, it’s an extra trip, but buying makeup at the drugstore means you’ll get a better selection and better pricing. Grocery stores carry these items for people who are in a hurry and don’t mind paying more. If you’re not one of those people, shop for your makeup and beauty items elsewhere.

6. Organic produce

• Markup percentage: 30-50%
• What to buy instead: Non-organic (sometimes)

There’s nothing wrong with switching to organic produce and paying a little more to stay healthy and pesticide-free. But certain produce items – like bananas and avocados – aren’t worth buying organic anyway. Do your research and figure out which fruits and vegetables you must buy organic and which don’t matter as much. It’ll save you a bunch of money at the checkout counter.

7. Deli meats and cheeses

• Markup percentage: 50%
• What to buy instead: Packaged meats

There’s nothing like getting some fresh sliced deli meat and cheese – especially when they let you try a few free samples. But you could save more money by purchasing pre-packaged meat that’s on sale or has a coupon. Price comparisons are the best way to determine the better value here.

8. Fresh butcher meats

• Markup percentage: 60%
• What to buy instead: Clearance or frozen meat

The meat section can be overwhelming even for the savviest grocery shopper. But if you’re looking for good values, first seek out any meat that’s on clearance and stock up. You can freeze it to have later or just be sure to eat it before it spoils.

Generally, frozen meat is cheaper than fresh butcher cuts and often goes on sale, too. Buying in bulk can save you on either type of item.

9. Batteries

• Markup percentage: 70%
• What to buy instead: Batteries in bulk

Keeping a stock of batteries for your home is essential. Overpaying for yours is not.

Buying batteries in bulk is the smartest solution for saving money on this necessity. Either head to a discount warehouse club like Costco or Sam’s Club or order yours on Amazon instead of getting this item at the grocery store.

10. Out of season produce

• Markup percentage: 75%
• What to buy instead: In season or frozen produce

The strawberries you buy in January are a lot more expensive than the same package you pick up in June. That’s because out-of-season produce has to be shipped from faraway places at certain times of the year.

Save cash by only buying in-season produce. Another option if you can’t live without your daily strawberry peach smoothie? Try shopping for your favorite fruits and veggies in the freezer aisle instead.

This is How Your Grocery Store is Tricking You Into Spending More Money

1. Mislabeling Meats

This tactic may seem so blatantly shady that it’s hard to believe stores get away with it. Make no mistake, though: It happens. A lot.

Many grocery stores have been caught duping shoppers with this bait-and-switch — labeling the weight of packaged meats as more than the food actually in the package. Sure, some stores intentionally put the wrong weight on containers, plain and simple.

But there are more surreptitious approaches worth watching out for. Factoring the weight of the package into the reported weight of the food is one way. Another is coating meat in ice so that you end up paying a premium a few cents more, which can add up over time.

2. Water-packing Meats

Have you ever seen a label that says something like “up to 10 percent solution”? This is another trick stores use — packaging meats in a water solution.

Beware of water-packed meats because the price per ounce includes all that solution. Sometimes, you’ll spot stickers that claim the solution enhances the food’s flavor or its other qualities. Perhaps.

But keep in mind that water is relatively free for the grocery store to use, it increases the food’s weight and it inevitably jacks up the price you pay. Cheap meats aren’t always so inexpensive when you consider hidden costs like this one.

3. Hiding Flawed Foods

Bruised strawberries, fatty cuts of meat, torn slices of cheese: What do markets do with damaged foods like these? Bury them in packages and sell them, of course!

Instead of tossing out or donating flawed foods, stores will instead strategically arrange them among undamaged goods. This way, you don’t discover the blemishes until you get home. The chance of customers like you going through the hassle of returning to the store, waiting in line and exchanging the item is pretty slim.

Choose packages that clearly show contents, or pay extra attention to what you’re buying to avoid getting suckered and stuck with rotten food.

4. Grouping Items That Go Together

Finding the foods you want at your local supermarket is something you’re probably very familiar with. You go to the bakery for bread products and the butcher’s counter for meats. Aisles are arranged by like products. Right?

This isn’t always the case. You may not have noticed foods that go together are displayed side by side, even though they typically would be stocked in different parts of the store.

Extra-thick, natural bacon and premium-brand refrigerated hash browns (neither is on sale, of course) get placed next to the egg shelf. Or an organic salsa gets placed next to tortilla chips instead of on the condiment aisle with all of the other salsas.

The store’s motivation in doing this is to suggest tasty (full-priced) pairings that you’ll grab out of convenience instead of going to the other side of the store to compare prices.

5. Diluting Liquids

Nabbing the cheapest laundry detergent doesn’t always equate to going home with the best deal. Store-brand liquids like cleansers or fruit juices are sometimes diluted. While you may only pay a fraction of what a name brand costs, you could be buying less of the active ingredients for the same price — or more — because the product is so watered down.

For instance, a label that reads “25 percent more” can mean 25 percent more in weight or in container size — not the active ingredients. “Fruit juice blend” can mean a mixture is made of 20 percent juice concentrate and 80 percent sugar water.

6. Making Riddles of Unit Pricing

Just because you made a midnight ice cream run and are standing in the freezer section in your sweats doesn’t mean you’re going to slack on doing your due diligence now that you’re there. Which one is the best deal right now?

This question can be tougher to answer than you might think, thanks to grocery stores’ creative use of pricing units. They mix it up on purpose. You’ll find that some ice creams are priced per ounce, others per pint and others per quart. It’s challenging to compare apples to apples — or fudge ripple to rocky road. Bring a calculator or conversion chart cheat sheet to help you.

7. Placing Priciest Items at Eye level

You’re most apt to notice items right in front of you when shopping. Call it human nature. It’s no wonder that distributors and manufacturers pay a premium price to put their products on shelves at eye level. This prime product placement zone is where the most expensive products are usually found.

Fortunately, there’s an easy way to avoid falling for this trick. Avoid that middle section! Pretty simple, right? The next time you go to the grocery store, force yourself to scout out groceries on shelves up high and down low; this is usually where the less expensive brands are displayed.

8. Setting up a Strategic Floor Plan

Many of us purchase the same essential foods like bread, milk and eggs. These foods are so common and so popular that grocery stores go out of their way to place them as far apart as possible. This way, they get the majority of their shoppers, like you, to canvas an entire store from one end to another to get a few key items.

But why? Their hope is that you buy more. When you’ve been exposed to more goods during your hunt for what you really need, you’ll probably toss in odds and ends you didn’t intend to buy that simply look enticing in the moment.

9. Reorganizing the Store Periodically

Another way food stores indirectly trick their consumers is to reorganize (or disorganize) products periodically. Entire food sections can shift from one side of the building to the other, sometimes as often as once a year.

When stuff is in a different spot, clearly you can’t readily find what you need. So, what do you do? Wander up and down aisles searching for the things on your shopping list. You see a lot of items that you wouldn’t otherwise notice.

Animal-shaped straws — the kids would love them! A type of parsley not carried here previously — perfect! Inevitably, you toss some of it into your cart. The store wins again.

10. Placing TVs at Checkout Points

It’s not commonplace yet, but some food marts have started putting TVs at checkout lines. The effect is twofold. These screens expose you to product ads, perhaps prompting you to buy more stuff either during that store visit or the next time you shop.

They also distract you. You’re probably not as focused on making sure the cashier rings up items correctly. Nor do you notice that your child snuck a magazine or wad of candy onto the conveyor belt that just got scanned and bagged.

It’s not hard to get sidetracked or distracted from the task at hand while grocery shopping. Sometimes, it’s easiest to stay focused (and on a budget) by simply sticking to your list and staying attentive at the checkout counter.

Why do Supermarkets Move Things Around?

Like other businesses, grocery stores want to make as many sales as possible. So to maximize those profits, they need their customers to purchase more items than they intended to in the first place.

For that to happen, they need to make it harder for the customers to find the items they need. This is where rearranging the store comes in.

By changing where the items are placed, the customers will have to walk around the store as they try to locate what they want. For instance, if you visit the store today then go back a few months later, you’ll find that some items are not where you found them.

As you walk around trying to locate them, you’ll see other items that catch your eye and you’ll end up buying them in impulse. If the products were left in the same place year after year, you’d probably pick up exactly what you came for.

Then, most likely you would leave without ever buying anything else.

Rearranging the store also allows the placement of best selling products at the front and that ends up enticing the customers. But savvy retailers also know that profits are higher on some items more than others. So they’ll also rearrange things putting the higher-margin items more in your face.

The other time stores rearrange is when a new product comes out.

There are times when a product stops being made by the company. Or, maybe it just didn’t sell well and your store decided to stop selling it. Or a popular brand introduced some hot new products.

In all of those cases, the store has to rearrange stuff to fill the space of a product that went away, and/or make room for the new stuff.

Lastly, rearranging items allows the store to get rid of products that are about to expire.

They might build a whole display of potato chips that expire in 2 months. They hope to sell at least some of them before they go out of date. After all, any bag sold, even at a discount, is one they don’t have to throw away and lose 100% profit on.

Here are some of the other psychological reasons to rearrange a store:

1. Color Breaks

Color breaks are another key component of good grocery store merchandising.

By that I mean if you have 2 items that come in a red box, and 1 that comes in a blue box, you WILL sell more of all of them if you put the blue box in between the 2 red ones.

That makes all of them stand out better. It also eliminates the possibility of the customer seeing 1 red one but accidentally grabbing the other one (and later returning it).

2. Products that appeal to the senses

The stores also put out visually appealing items like flowers at the front of the store where you can easily see them.

Since flowers also smell great, they give customers the idea that the store has fresh products. Most people associate the smell of flowers with freshness and they may even end up buying the flowers.

3. Proven ways to drive customers through the store to the back

Other items you buy like milk are usually placed at the back.

This is because milk is an essential product that most people need and will have to buy no matter where it is placed. As the customer tries to get to the milk, they’ll have to pass other products that they could end up buying on impulse.

4. Put the banks up near the front to make sure they have plenty to spend

By putting the banks at the entrance, it ensures customers can do their banking first and have plenty of cash to do their shopping.

5. Give people a reason to hang out

By having a deli, bakery, and/or coffee shop in the corner, customers will not be in a hurry to finish their shopping and go get soothing to eat.

Instead, they’ll spend more time in the store. The more time spent in a store, the more people are apt to buy things. And they might even decide to pick up premade meals for dinner while they are there.

6. How stores pick which items go where on a shelf

The top shelf usually has products that have products from brands that aren’t very popular.

The shelves that are at your eye level are given to the best selling and/or most profitable products. These are products that are from reputable brands and can therefore easily attract attention. They aren’t necessarily the cheapest products but they still sell well because of the reputation of the brands.

The bottom shelves are usually reserved for very heavy or bulky products. That way a customer isn’t having to reach way up to grab a 10lb jug of cat litter or a huge container of laundry liquid.

How Often do Grocery Stores Change The Layout

Although there isn’t a specified frequency that retailers follow when rearranging the store, most of them reshuffle a little bit every few months.

But what they call endcaps, the displays at the end of each aisle, often change every 2 weeks or so.

For huge store-wide changes, once a year is not uncommon, while some retailers might rearrange twice every year. There isn’t a set pattern for how often they change. But in a hotly competitive town, you might notice they do it more frequently since they are trying to win a larger share of the grocery sales in the town.

Sometimes rearranging is done at the request of the product vendors.

Believe it or not, many large vendors these days pay the stores what’s called a slotting fee. In other words, they pay the store (a lot of money in some cases) to get good placement in a store for their products.

Good old fashioned quid pro quo.

Some vendors may want the store to place their products at a location that they consider to be premium. In such a case, the store may be forced (by their slotting fee agreement) to make the changes immediately. And yes, that’s even if it’s just a few days after they made their last reset.

Lastly, stores, of course, want to rearrange the store depending on the season.

No one wants to see a huge pumpkin patch out front in June or tons of watermelon in January. Different products are seasonal which means that they’ll sell more in some seasons than others.

So you can bet as we prepare for a new season, big changes are coming to your grocery store’s aisles.

How is a grocery store organized?

1. The front of the store

Most stores start by placing flowers at the front.

That is often the first item customers see when they get into the store. Produce is placed next to the flowers because of the freshness of the flowers. The freshest and most seasonal produce (and also often the cheapest) is placed at the front while that is not so fresh and is put in the back.

That’s designed to give the impression that everything is fresh, seasonal and low-priced.

Other products kept near the entrance are those that are referred to as “grab and go”. These are items such as bottled water, snacks, and even milk. Customers can easily grab some to consume as they shop which they might not have done otherwise.

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Large stores also place banks closer to the entrance. This makes it easier for customers to withdraw money to be used in the store. Apart from discounted items, new products or products that are in high demand during a specific season are placed at the end of the isles.

Candy, magazines and other products that can be bought on impulse are usually placed near the registers so that customers can pick them as they wait and they won’t have enough time to change their minds.

2. The departments around the perimeter

Bakeries are usually placed beyond the entrance. The fresh baking smell usually triggers hunger pangs and will most likely lead to shoppers buying more food items. Some chains can even have a special air conditioning system to pipe the smells from the bakery to the front of the store so it hits you the moment you walk in.

Deli and coffee bars are usually located closer to the bakeries in one of the corners. Free cooking demonstrations and samples of free products are usually placed on one side of the walls on the outside.

3. The center of the store

Other household merchandise such as cooking ingredients and canned foods are usually placed in the center aisles.

The back walls usually have staples like eggs, meat, and dairy products. By the time the customers get to the middle and the back shelves, they will have seen other non-essential items along the way and probably bought them.