Surprisingly, poorer people are less likely to take advantage of sales and bulk purchases says Fast Company reporter Adele Peters. Shopping depends on how much cash you have on hand, which for some families without a high income isn't much. Though it's cheaper to buy in bulk, you may not have extra cash on hand at any given time, meaning you'll probably just still buy a few items at a time and miss out on the sale according to a new study that looks at toilet paper as an example of this economic phenomenon. Lower-income households are often shopping out of necessity, and don't have time to wait around for good deals.
"It's really interesting to think about some of the savings that a lot of middle-income people take for granted—going to Costco, going to Walmart, buying bulk items—it's a luxury, actually," says Yesim Orhun, a professor at the University of Michigan's Ross School of Business who led the study. "You've got to have the cash to be able to do it. That's basically what we documented."
The study found that on average, low-income households save around 9% by buying the cheapest brands they can find, but because they can't take advantage of deals they miss out on another 6% in savings. Location also has a big impact on what kinds of savings and buying options are available.
Unlike richer households, who tend to have several supermarkets or big-box stores to choose from, a poorer family might be stuck with a single nearby store."If there's a monopoly, if the only supermarket in town is facing these consumers, they're just like, 'Oh, great, they come shopping very often; they pay higher prices. Why would I ever want to fix this?'" Orhun says. "Nobody would want to fix this except if they face competition for these consumers."