Does ‘Cost Plus’ Cost More?

The NPJ received an email from a reader asking the following question:

Can someone explain the 10% surcharge on my receipt and why the prices showing on the shelves are not the price we pay at the register?

We decided to look into this matter. Looking at the front of the store it has the Piggly Wiggly logo and brand name, but underneath it says “A Cost Plus Food Outlet.” What does this mean?

The important thing to not is the “Cost Plus” phrasing. This means that all items will be offered at the cost to the stores plus 10 percent. The reasoning behind this change in pricing is that with cost plus 10 percent pricing, every item in the store will be on sale every day. This is meant to be a savings to customers between eight and 10 percent and possibly more on everyday purchases.

This is not a new business model as we found news articles on other stores in Baton Rouge and Brundidge Alabama (to name a few) dating back to 2011 and 2017.

This model is geared toward the store making more money by selling at a greater volume. When customers buy items, the price on the shelf reflects what the store paid for them. Shoppers are then charged a 10 percent add-on at the cash register for each item.

We decided to check this out. We bought three items at the Piggly Wiggly, then went and bought the same (or comparable) items at Super 1 and Walmart.

The items we purchased were:

1. A pack of Oreos
2. A can of flavored sparkling water
3. A bottle of Powerade

Side Note: As we were purchasing our items for comparison we overheard an employee trying to explain why the 10% surcharge is added to the overall bill. The explanation was given a few times as this subject seems to be very confusing to customers.

We think the receipts from our purchases speak for themselves. Is the “Cost Plus” grocery model really saving the customer money?

16 thoughts on “Does ‘Cost Plus’ Cost More?

  1. No disrespect intended, but this exercise has absolutely no value if you aren’t comparing exact same items (apples to apples)!

  2. I looked more closely at the receipts, and it appears the purchases were not identical in the three stores. I’ve complained about the tiny images in the NPJ before, but I enlarged the receipts and it was not Oreos at two stores, and the bubble water was not the same brand at any store. That’s NOT the way to investigate.

  3. This is absolutely a rip off to consumers. If the Police Jury let this continue you will never get good stores in that town. Food stores and restaurants are your #1 tax revenue.

  4. Yep, a shopper should, in my opinion, take a list of items you purchase often and compare all of those
    stores.(not a bad idea to keep a running list and check your normal store every once in a while)

    As for the question about the gasoline 9/10 cent, I believe that is a State or Federal game of taxing,
    I for one wish they would drop it and just put the even cents of tax on.

  5. I would like to see a more typical shopping basket priced. Those are three high profit items, and no loss leaders in the group. Grocery chains typically derive some of their profit from discounts they receive from vendors, and these items would not ordinarily be discounted.

  6. Piggly Wiggly is paying $6.34 for these items, which is more than the total bill in either of the comparing stores. Then they have to pay their overhead. I agree these items alone are not a good comparison. All grocery stores have draw items. Things to draw the customer in hoping they do all their shopping in one store. They won’t be in business long if they don’t have prices on necessities to bring the people in. What I find interesting is the sales tax. Why is Walmart’s tax 2 different tax rates for the same items that are all food tax in the other 2 stores?

  7. Oh great, let’s take advantage of poor people trying to save money. Thank you for exposing this scam. I hope the word can spread to the community who shop there. I went one time excited to see a new store here. The floor was so filthy and nasty, it looked like it had not been mopped since they moved in. I could not get out fast enough and glad I purchased nothing!

  8. Nothing but mind games and marketing. Any marketing 101 student knows 6.99 will sell rings around $7.00. (Never add the $ sign.) I’m not impressed with any company that does this, the consumer doesn’t need to know nor care about the store’s cost.

  9. Of course 3 items do not constitute a significant sample for the purpose of analysis. What the store actually paid is highly dependent on it’s buying power and practices. Price per unit can even vary within the same chain.

  10. Most places that charge a surcharge in retail like grocery stores charge it when you use anything other then cash. Like credit and debit cards, some even charge if you use a check. Never seen it used if you pay cash using cash. Businesses pay a huge amount back for taking credit and debit cards. I always thought it should be the other way around.

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