It's only a reduction of 6.993%, but it's better than nothing

Lingonberry Fruit Spread display at IKEA

Ligonberry Spread "New lower price" sign

Lingonberry Fruit Spread jar

Price reduction on the shelf tag

Sunday afternoon I was at IKEA. (More wooden hangers for my kid's closet.) I saw this sign in the Swedish Marketplace section.

A price reduction, not a huge one, but a price reduction nevertheless. Given the recent new about inflation, any price reduction is worth shouting about. And in addition to the price reduction, the product had a pretty prime spot and there was lots of stock on the floor.

But the price reduction didn't change my buying behaviour. (Already had a full jar at home. Didn't need another one just yet.)

 

Changing the pricing, but not changing the sign

Sign outside Freshslice Pizza location, UBC, Vancouver, BC

Sign outside Freshslice Pizza location, UBC, Vancouver, BC (Detail)

The price of a slice of pizza at Freshslice was $1.29 and then rose to $1.43. ($1.50 with tax.)

But due to increasing costs Freshslice split its menu in half and now charges an extra 50 cents for "Feast" slices. This change came into effect months ago.

But some locations are either unwilling to update their signs, or are using the sign with the now abandoned "Any slice" policy as a "bait and switch" tactic.

Either way is is not the sort of behaviour that I will reward with my business.

How to deal with inflation or Solve one problem but cause a few more.

Sign at Dollarama, Vancouver, BC (Photo taken February 3, 2016)

Price are going up. The decline in the value of of the Canadian dollar is forcing retailers to increase the prices fr all of the goods that they import. And as prices go up, the value of the average transaction is also rising. For a business that previously only accepted cash and Interac, rising prices run headlong into consumer cash flow problems.

And the remedy for consumers who don't have enough cash, either on hand or in their bank accounts, credit cards can the the answer.

Of course with credit cards come all of the attendant fraud and abuse. But is someone really going to use a stolen credit card at Dollarama? There are lots of other places that sell goods that are much more attractive.

A recipe for disaster

Advertisement for new single-zone bus pricing, SkyTrain, Vancouver, BC

When prices go down, demand goes up. That is one of the most fundamental principles in economics. The public transit system in Vancouver used to apply pricing in a consistent way. There are three fare zones. If your trip in within a single zone your need a one-zone ticket. If your trip goes from one zone to another you need a two zone ticket. And if your trip includes all three zones then you need a three zone ticket.

But now the transit operator, TransLink, is changing the pricing system and all trips on the bus will only require a one zone ticket, while trip son the SeaBus or SkyTrain will remain multi-zone if they cross a zone boundary. So, if I have the choice of taking a SeaBus or SkyTrain, or a bus, I may be tempted to take the bus and save some money.

So, this should lead to more bus passengers and fewer SeaBus and SkyTrain passengers.

But evidently TransLink is not planning to add any more buses. So, more demand and the same supply. Sounds like the making of a fiasco.

Using prices to drive demand

Sign outside Cactus Club Cafe, Park Royal, West Vancouver, BC

When times are slow you can either close the doors or try to increase the sales. Happy Hour is the textbook example of the later.

In this case the three hours between the lunch rush and the dinner rush from Monday to Friday represent an opportunity for Cactus Club Cafe to try to encourage its patrons to spend more. And the same can be said about the hours after the dinner rush, 9:00 pm to close from Sunday to Thursday.

Critics might say that this sort of variable pricing will encourage consumers to drink more while the prices are cheaper. The flip side is that these businesses are facing high fixed costs and Happy Hour is just an effort to extract a bit more revenue from slower periods. I suspect the former is true, but these businesses will insist that it is the later.

Inflation by stealth

Package of doughnuts from Walmart

Package of doughnuts from Walmart (Detail)

According to the Bank of Canada the current inflation rate, May 2015, is 2.2%. (Source: http://www.bankofcanada.ca/rates/indicators/capacity-and-inflation-pressures/) Yet some observers have noted that the price increases are actually much higher. Some of the price increases are easy to see. When the price of gasoline goes from $1.10 per litre to $1.30 per litre the price increase in undeniable.

Yet other price increases are less noticeable. Walmart sold a box of a dozen muffins for $4.00. Walmart still sells a box of a dozen muffins for $4.00. The inflation is reflected the number of muffins and thus the cost per muffin. The new box only contains nine (9) muffins, so a price increase of 25%. Peek Freans did it with cookies reducing the number of cookies while keeping the box the same size and going from 350 grams to only 300 grams

2013 Packaging

2014 Packaging

Coca-Cola has done it with the personalized bottles of Coke changing the size from 591 millilitres to 500 millilitres.

Yes it is a small detail, but one that leads to higher prices for consumers and higher profits for brands and retailers.

Looking for logic, and not finding enough

Menu page at Red Racer Restaurant (Note the price of the first item)

Menu page at Red Racer Restaurant (First item on the above page)

Menu page at Red Racer Restaurant (Note the price of the third item)

Menu page at Red Racer Restaurant (Third item on the above page)

Consistency may be the hobgoblin of small minds, but it can make life easier for both customers and staff.

On one page of Red Racer's menu I see prices listed in dollars and fractions (15 1/4), on another I see prices listed in dollars and cents (14 75).

Why not be consistent?

This latte is only $1.00, and that should be warning enough.

Sign announcing the new $1.00 latte at 7-Eleven, Cambie Street, Vancouver, BC

7-Eleven has had cheap coffees before. For a few weeks all sizes of poured coffees were $1.00. Now the $1.00 price point has been extended to lattes.

You do tend to get what you pay for. I will try this coffee, but I don't have high hopes.

Fresh ground and fresh milk are a start, but for a real latte I'd be looking for fresh roasted and well made, two elements that are not mentioned.

Perhaps I should not be so sceptical. This coffee might be quite acceptable. Perhaps, but I think rather unlikely. I'll report back at the end of the week.