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Monday, May 21, 2007 | As housing prices hover at near-record highs, gas costs soar and prices multiply for staples like oranges, bread, chicken and eggs, some thrifty consumers are banding together to hunt down the cheapest prices.
In one new venture, consumers can use a computer program to compile grocery lists for nearby stores in order to find the lowest prices on everything from baked beans to bean sprouts, and to join forces with other penny pinchers in order to cut costs. A couple of local entrepreneurs plan to roll out that program next month.
They’ve developed the Price Information Exchange, or PIE, program where consumers click the products they want to buy and select which stores they’re willing to shop at. The database cross-matches the products with those stores’ weekly sales and coupons and comes up with the lowest price option, and then offers a printable grocery list that synthesizes those choices. When they’re done shopping, they can go back on the website and confirm or correct the prices they found and receive incentives, say founders Cliff Fleischbein and Phil Tyler.
A quick peek at the program yielded the following results for a reporter’s grocery list, hypothetically shopping in La Mesa. For possible stores, she selected the Albertson’s on Fletcher Parkway, Henry’s on Palm Avenue, Ralph’s on Grossmont Boulevard and Vons on Lake Murray Boulevard. Then she added to her shopping list a gallon of 1 percent milk, a jar of jam or jelly, a pound of bacon, a frozen pizza, pasta sauce, bottled iced tea, bottled water, a loaf of bread and peanut butter.
Then the computer calculated the shopping list total based on how many stores the reporter chose. With her list above, selecting one store yielded a total of $20.49 at the Albertson’s. But when she allowed for two stores, the total dropped to $16.97, sending her to Vons for the bacon, pizza, pasta sauce, bread and milk, and Albertson’s for the rest. Three stores dropped the bill further to $16.48 and added a stop at Ralph’s for water and milk.
Tyler and Fleischbein’s entrepreneurial effort comes at a time when food costs are rising at the fastest rate in more than a decade. Federal statistics released last week indicate grocery prices in parts of Southern California have increased at 5.7 percent since last year, more than the 3.9 percent experienced nationwide, an unusually high increase itself. While that report didn’t include San Diego, officials say the trend extends similarly here.
And should the grocery workers union be successful in garnering higher wages for its workers in current labor negotiations, some consumers fear an even more dramatic cost increase for their grocery staples, accentuating the need to be thrifty.
“People are saying, ‘My budget isn’t going up; I’m not making more money,’ but prices are going up,” Fleischbein said. “And this is one of those ways — the only place where we have any immediate capacity to reduce our costs is in our groceries. It’s a bunch of Davids going up against the Goliaths.”
Fleischbein and partner Tyler developed the grocery list creator, for which subscribers will pay a maximum of $14.95 per month for access. The database holds hundreds of products and cross-matches them with stores where groceries are sold in San Diego. The list creator is what’s known as a “wiki” — a software program that can be edited and augmented by users.
Having used the program themselves, and with the participation of a handful of testers for the last few months, they estimate consumers will save between 30 and 45 percent on groceries each week. Fleischbein, a self-employed information systems consultant, said he and his wife typically spent $600 per month feeding their three children. Now, the family, which lives in Clairemont, have reduced their grocery shopping bill to $425, Fleischbein said.
The concept of thrifty shoppers using the Internet has found success at Fueltracker.com, the gas-price logging arm of the Utility Consumers Action Network, a prominent non-profit consumer group. Started a decade ago, Fueltracker features volunteer “agents/spies” who report gas prices from all over the county. UCAN’s average for regular gas Friday was $3.44 for regular, $3.66 for premium and $3.04 for diesel.
Visitors to the site can scroll down to the bottom of the page to find 50 listings of prices cheaper than those averages.
Charles Langley is the publisher and gasoline analyst for UCAN and was involved in the Fueltracker launch in 1996.
“We were a little naive about it,” he said. “Gas prices had soared to $1.35 a gallon, and we thought if consumers looked around, they could drive the prices down. But we soon realized the gas interests have ironclad control over the street prices.”
Still, he said, the site’s popularity has ballooned as consumers search for any way to find price relief as gas costs guzzle more of their paychecks — within reason.
“It doesn’t make sense to drive 30 miles through rush hour traffic to save 15 cents on a can of beans,” he said. “But we tell people to literally go the extra mile, to go across the street to save a nickel per gallon.”
And when it comes to groceries, Langley said UCAN’s been thinking about making a Fueltracker feature for food staples. Briefed by a reporter on the Price Co-op venture, he said it sounds like a similar venture, except for Tyler and Fleischbein’s model being for profit.
“I’m a ruthlessly disloyal shopper,” he said. “If I’m having a feast or a barbeque, I’ll go check each grocery store, see what they have — it can save you a lot of money.”
That running around town is exactly what Tyler and Fleischbein say their program will eliminate. A couple of weeks ago, Tyler was to bring potato salad to a picnic with co-workers in the music department at Point Loma Nazarene University, where he runs the string program. He typed in “potato salad” to the exchange, which alerted him to a 99-cents-per-pound deal at Henry’s.
“You don’t need something this sophisticated for just one item, but you can easily pay $3.69 a pound on sale,” he said.
In addition to the user-supported features which they hope will snowball once customers start using the program, the entrepreneurs have hired editors who take stores’ published fliers and input the advertised information, embedding the start and end dates of the sales.
Tyler and Fleischbein have gathered a few dozen names on an interest list, including several from a convention of home-schooling parents held a few weekends ago. They’re hoping their effort will gain viral strength, spreading from consumer to consumer in a word-of-mouth campaign. To help with the contagion, they say they’ll halve subscription fees for users with every subsequent person they sign up.
But while UCAN’s Langley supports the idea behind their venture, he said he’s not convinced these types of consumer advocacy programs should have fees attached.
“What they’re trying to do is encourage competition, to empower people with information, but they’re saying, ‘You will pay us to get this information,’” Langley said. “In order to cut your costs, you have to become a disciple of the product, a missionary for the product.”
Fleischbein addressed the concern that subscribers to the program are literally helping to pay for his and Tyler’s groceries. He noted one part of the co-op is a free e-mail newsletter that includes a selection of frugal tips.
“They’re trying to pigeon-hole us; [some] think we’re working for a consortium of grocery stores,” he said. “And the grocery tycoons, they’re not bad guys, they’re just looking at consumerism and buyer behavior. They’re just being good business people, but we’re many eyes agreeing to share what you’re paying for the groceries so the next guy can benefit.”
The recent rise in food prices owes quite a bit to energy and fuel costs, said Patrick Jackman, economist with the federal Bureau of Labor Statistics.
“It certainly has an impact on getting the goods to market, whether it’s food components or not,” Jackman said.
And the freezing temperatures last winter drove an icicle through the heart of the California citrus crop, drastically reducing supply and propelling costs up for many fruits and vegetables. At the same time, the country’s corn farmers have multiplying outputs for their crops.
“Meat prices are increasing, and some of that is due to rising feed costs, because they’re using more corn for ethanol,” Jackman said. “There’s so many competing uses.”