Shop sagely and avoid impulse buys
You have probably heard of Tesco, the big British-based supermarket owner with 5000 shops in 13 countries.
It is not really common knowledge, but I own this business. Unfortunately, when I went to buy the Tesco business, I did not have the £25 billion necessary to buy the whole lot, but I could afford a few thousand shares to take a part ownership.
As an owner, therefore, I was delighted this week to visit one of my shops in Ireland and see that it was looking smart and busy.
The Celtic Tiger, a term that once described Ireland, has lost its teeth and claws and is looking a bit mangy. Unemployment is running at 15 per cent and incomes are down for many of those who have work. The bling years are gone as lots of people struggle to make ends meet.
Nevertheless, despite the recession, there are certainly customers buying stuff at Tesco.
They have a lot to choose from - Tesco sells almost everything: groceries, electrical goods, clothes, petrol, pharmacy and mortgages, to name but a few. This has squeezed some of the other operators here in Ireland and these smaller locally owned chains of more traditional supermarkets are nearly reduced to corner dairies by comparison.
Tesco must also be squeezing the average family - the offer of wares from Tesco is so attractive it is hard indeed to get out of the place without blowing the budget.
However, there is another option for the Irish - there are two big, ubiquitous chains of discounters: Lidl and Aldi.
These are owned by two German brothers who are in fierce competition with each other. Lidl and Aldi are both very, very cheap, but their offerings make The Warehouse and Pak'n Save look like Harrods - they are cheap, but very basic.
So, with money tight, the Irish tend to shop in Lidl or Aldi for basics, and then go to Tesco to top up with other stuff.
Although I own shares in Tesco, I think this part of the shop is a mistake - anyone on any sort of tight budget should stay well clear of Tesco. Quite simply, the Tesco offering is just too tempting. In fact, there are studies that have shown as much as 40 per cent of supermarket purchases are unplanned, never intended.
Everything that makes a good investment for me makes a bad place to shop for people who are trying to save money.
Tesco is brilliant at getting customers to buy stuff that they never meant to, but some New Zealand supermarkets are reasonably good at it as well.
Although average New Zealand shoppers may not spend 40 per cent of their money on impulse buys, it is quite a high figure. My guess is that impulse buys are the name of the game for supermarket owners.
There are, however, a few things you can do to beat the supermarket at its own game and to keep spending in line.
First, shop with a list. It is the unintended purchases that blow the budget.
Those impulse buys are exactly what the supermarket with all its design and layout is after. Only by shopping to a list and being staunch can you withstand the marketing push of product.
Second, try to shop as infrequently as possible, preferably only once a week.
Each time you make a supermarket visit, you are hit by messages asking you to buy things that you do not need or, at least, did not intend to buy.
One big weekly shop is a lot better than a daily visit.
Third, convenience costs. That "quick" stop at the supermarket on the way home from work to pick up dinner probably costs a great deal more than a more considered and planned shop.
Not only do convenience foods cost more, but these quick visits become a habit and you are back making daily supermarket visits.
Fourth, stay away from the supermarkets that are high on display and, therefore, high on temptation.
A good way to do this may be to shop for groceries online. Online shopping attracts a delivery charge but, for a lot of people, this is small compared with spending as much as 40 per cent more on things you never intended to buy.
When you are overseas, I would very much like to think that you would shop at Tesco, but in New Zealand, keep it basic and stay out of the temptation of slick promotion and merchandising.
Martin Hawes is an authorised financial adviser and his disclosure document is available at martinhawes.com. This article is of a general nature and no substitute for personalised financial advice.
Sunday Star Times