Low-cost supermarkets: price, not value

When it comes to shopping, consumers believe they are facing a dichotomy between high quality and low price.  Supermarkets that offer the lowest prices tend to be prejudged. Customers tend to think that if the price is lower, there is a reason for it. In some cases, such as private label products, there is. However, there are supermarkets where formulas are used to reduce the price of products without them losing their value. So, how do they do it?

 Price and value

To answer this question, we first need to understand the difference between price and value. While price is the necessary amount of monetary units for an exchange to take place, value is the set of characteristics and circumstances associated with the product that give it a degree of usefulness.  

Sometimes the price is a reflection of the value of the product, however, this is not always the case. The price is also conditioned by other factors such as the supply and demand curve, the specific needs of a sector, etc. Some “low cost” supermarkets are well aware of this, and in recent years they have found ways to reduce the price of products without sacrificing quality. Actually, it is possible to find in these “low cost” supermarkets products that are totally identical to those we would find in reference markets, except that we will have to pay less for them.

The case of Sqrups

A clear example of this pricing policy can be found in the “low cost” supermarkets of Sqrups, currently in a financing round with Fellow Funders. This chain offers consumers products at prices between 20 and 80% below the market price. 

How do they do it?

Sqrups sells out the stock that other companies have not been able to sell, either because the products are too close to their expiration date or because consumers were not willing to buy them at market prices. This allows the chain to obtain these products at prices significantly below the market price, while maintaining their quality. 

Despite having managed to reduce the prices of their products considerably, chains such as Sqrups still face a major challenge: reducing buyer prejudice. It is difficult to explain to a consumer that the cookies he buys at Sqrups are just as delicious or healthy as those he gets at Mercadona, even when they are cheaper. If this barrier can be removed, the retail market will evolve to a new model with lower prices, but with value intact.

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