Photo: Flickr / Walmart Stores
Retailers recently won a major concession from banks and credit card companies.Deep within a $7 billion dollar settlement lurks an agreement that allows your favourite stores to issue a surcharge on your purchases whenever you use your credit card.
It’s been part of a long-fought battle between retailers and credit card companies, and the result could mean an additional 1.5 to 3 per cent in fees rung up at the point of sale.
Although retailers and credit card companies have worked out a deal, it doesn’t mean that consumers are destined for higher bills. Shoppers would still be able to avoid fees by using cash or a debit card. Consumers could also avoid shopping at retailers that implement the fee. The ease with which consumers can change purchasing behaviour has retail groups like the National Retail Federation sceptical that fees would actually be adopted by stores.
Aside from credit card fees, consumers face numerous costs at cash register that don’t add value to purchases. However, shoppers aren’t helpless. There are ways for fighting these added costs and choosing to do so will lower your family’s spending.
When’s the last time you hung the box to your new smart phone on the wall because the artwork was visually stunning? Most packaging is designed to attract your eye and convince you to make a purchase. These are great benefits for manufacturers, but it does you little good outside publically mandated disclosures. In fact, most packaging doesn’t last longer than the moment you return home from a store, or worse, it clutters your house until you finally use a product longer than a retailer’s return policy.
Not all packaging is a waste. You need something to carry your milk home. However, most of what you are buying is of little use to you, but that doesn’t mean that you aren’t paying for it.
Fight Packaging Costs: Companies are aware that packaging adds to the price. That’s why there are many retailers and manufacturers who compete at a lower cost by minimising packaging without necessarily providing lower quality. Some examples include cereal sold in a bag, wine sold in a box, and most items purchased in bulk. There are companies who want to sell you inexpensive packaging, you just need to find them.
Coke has a secret formula locked away at company headquarters. Is there a secret Tylenol formula that merits a more expensive product? I’m not a doctor, but I do know that Tylenol’s acetaminophen is not superior to other generic brands. How is it that Tylenol charges so much for its over-the-counter drugs?
Because the company advertises more than its competitors. This builds name recognition and an image that translates into a higher price. In other words, your headache won’t know that you are buying Tylenol, but your wallet will.
Fight Overpaying for Brand: The best thing you can do for your family is research products and potential alternatives. For a long time I purchased Tylenol for my family. It wasn’t until I started comparing active ingredient labels that I realised just how much I’d been overpaying for over-the-counter drugs. The same goes for any product you take off the shelves.
Bad behaviour from Other Consumers
Whenever fellow consumers try to take advantage of a company through unethical means, it creates costs for those following the rules. It could be the shopper on the other side of the country exercising a five-finger discount, pirated entertainment, and software or a frivolous lawsuit that needs to be defended by company legal teams. These things add up for companies and often translate into higher prices for those who follow the rules.
Fight Bad behaviour from Other Consumers: This is not going to be a popular thing to say, but most people need to take things like copyright infringement and fair use seriously. Any product obtained through illegal methods, even if it’s downloading off of the internet, is bought and paid for by those following the rules. The solution means confronting other consumers about poor behaviour. It’s not fun, but it will lower the cost to everyone in the long run.
Bad behaviour from Companies
Customers don’t have a monopoly on bad behaviour. Retailers and manufacturers also walk the wrong side of the laws and regulations. Legal challenges, fines, bribes to foreign officials, and even outrageous executive compensation packages need to be funded by the prices people pay at the register.
Fight Bad behaviour from Companies: Discouraging costs from corporate irresponsibility is all about raising the cost of bad behaviour. Avoid patronizing establishments you know to be unethical.
Some of these costs are easier to deal with than others. However, consumers are not powerless in avoiding them.
JP is the author of the money blog My Family Finances, a site dedicated to helping families make wise financial decisions. He is also an MBA and works in corporate finance.