Why are consumers such suckers?
Despite the fact that we have more savings tools at our disposal than ever before, most of us do very little comparison shopping.
We have apps, websites and nonprofit organizations to help us save money, yet only a small segment of Americans practice comparison shopping.
We all know the drill: Shop around, get three bids, don’t assume every sale price is a good deal. It makes some of us tired just thinking about it.
Most people don’t comparison shop and businesses know that, according to Kevin Brasler, executive editor of Consumers’ Checkbook, a nonprofit organization that rates local service providers in the Twin Cities and several other national markets. He’s spent 20 years being a professional price checker and knows that shopping around has a big payoff. “We routinely find that when we shop around, the lowest price is usually half as much as the highest price,” he said.
Brasler admits that isn’t going to happen if you’re shopping for an Apple product, where Apple has put price controls in place for all of its retailers. But he’s got plenty of examples to show that comparison shopping really does pay off.
In the Twin Cities, Checkbook.org has discovered that plumbers’ prices to replace a Delta bathroom faucet (model LAHARA2538LF) ranged from $202 to $505; local appliances stores were charging prices ranging from $2,548 to $3,280 on the same LG stainless-steel refrigerator; and tree care companies were charging $450 to $1,860 to remove the same five trees, cut the stumps to grade level and haul away the debris.
Even when consumers have a major expense costing hundreds or thousands of dollars, they often skip getting three estimates. And service providers know that. “The more difficult it is to shop around, the bigger the price differences,” Brasler said.
Showrooming, the act of visiting a retailer to check out a product and then buying it online at a lower price, is also showing signs of decline — despite being a phenomenon that’s only a few years old.
According to an IBM study released by the National Retail Federation earlier this year, only 8 percent of consumers showroom, but more shoppers are now skipping the bricks-and-mortar trip and browsing online only.
Often, people are more interested in saving time than money.
“There will always be the segment of society that engages in comparison shopping, but it’s not as huge as people think,” said Vlad Griskevicius, marketing department co-chair at the University of Minnesota’s Carlson School of Management. “The larger group is willing and always wants a better deal, but things get in the way. The biggest is time. If getting the better deal requires more work, each additional step decreases the likelihood they will take those steps.”
Target, Wal-Mart and even Family Dollar have touted ad-match programs so consumers can confidently shop at one retailer but still take advantage of competitors’ lower prices on some items. It’s the ultimate timesaver — one-stop shopping. But considering the time it takes to collect the competitors’ fliers and the time it takes at the register while a poorly trained employee tries to figure out the savings makes many consumers give up. Only 5 percent of consumers take advantage of price matching, said Marshal Cohen, senior analyst at the NPD Group.
Time-starved Americans rationalize that comparison shopping doesn’t save that much money. We squawk about the high price of food, gasoline or airfares but assume that there really isn’t much that can be done. I think most of us would rather not know what we’re leaving on the table by not comparison shopping.
I put that to the test recently with several major purchases. I had a leaky exhaust system that Car-X wanted $521 to fix. Rather than say “Go ahead, fix it,” just to be done with it, I called the Chevy dealership, my auto mechanic and another national muffler chain. I saved $250 by doing so, thanks to Automax. But many of you are probably wondering how much time it took to save that. It was two hours, including several phone calls and driving time to a second shop to fix it. Is $125 an hour worth it? Your call.
That’s not all. I also saved $300 on a special order sofa sectional by comparing prices by phone at Macy’s and Gabberts, $170 on a Robert Abbey lamp at Lappin Lighting in Minneapolis compared to Lampsplus.com and $1,000 on Graber wood blinds at Stevesblindsandwallpaper.com compared to Costco. Each product comparison took an hour or two.
If comparing prices sounds as fun as a trip to the dentist to you, I reluctantly understand. We all have to make choices about how we spend our time. But I’m not going to let you off the hook completely. Consider a subscription to Consumer Reports and Twin Cities Consumers’ Checkbook (www.checkbook.org). Consumer Reports can steer you to products that offer high quality at lower prices, and Checkbook can help you find auto repair shops, electricians, plumbers and other service providers that cost a lot less than their competitors.