Here is one of those things that you probably knew all along but never really thought about: Asian groceries and grocery stores are way cheap. But why? Luckily for us, the Internet knows.
Unsophisticated Retail Tactics
Almost no Asian market owners spend money or time on such consumer spending optimizers as fliers, advertising, competitive pricing strategies, market research, information systems, shelf-space positioning strategies, frequent shopper club memberships, or interior decorating.
Western supermarket chains do not do these nice activities because they like you! Supermarkets do these things to bring you in the store and because they generate more revenue than they cost to perform. That extra profit comes from your pocket.
Market’s Economies of Scale
Economies of scale kick in in major cities with a large concentration of Asian people. There are frequently one or two major Asian markets that have more shoppers per square feet than any western supermarkets I’ve ever seen. Visit the fresh fish counter in a major Asian stores in a city like Boston or San Jose just to see the massive volume sold. I remember from some market research a couple years ago, in the US, the average Asian and Hispanic shopper buys more groceries and cooks from scratch more frequently than the average western shopper. Volume drives down prices.
Weak Asian Brands
Frequently, foods made in Asia are sold very inexpensively in their home country due to weak branding, low labor costs and extreme price competition. This bruising competition is carried abroad at every stage in the wholesale chain keeping prices low.
Almost No Product Advertising
Asian branded products are not advertised internationally. When you buy TV and print advertised products, like those from General Mills or Kraft, you pay about 7% in direct advertising expenses and frequently far more for “brand value”. If companies don’t spend on ads, you don’t learn the differences between brands without trying them yourself, but you also don’t have to pay for their ads.
I’m very nostalgic for Chinese candy, which Scott thinks is utterly vile. He also reminds me that “sometimes Chinese factories forget not to put fertilizer and lead paint in the candies”. “Confucious say Everything in moderation“, I usually reply, squinting and bowing my head in wisdom. He never has an answer for that one.