Here at Paribus, we noticed that some shoppers tend to regularly overpay for the items they buy, while others are better at getting the best deals on their purchases. We decided to investigate and see which shoppers were the best at finding deals and which shoppers missed out the most.
To figure out which shoppers were consistently missing the best deals, we looked at over 1.4 million purchases made in the last year. Then we figured out what percentage of the purchased items later went on sale for a better price. Our data suggests that shoppers living in the poorest areas in the United States are the most likely to overpay for their purchases.
Overall, our data showed that shoppers living on the coasts, where incomes tend to be higher, were actually better at finding the best prices on their purchases than shoppers living in the Midwest or the South. In fact, Midwesterners missed the best deal approximately 15% more often than West Coasters, with Southerners missing the best deals almost 18% more. On a state level, Californians and New Yorkers were some of the best bargain hunters, while shoppers in Ohio and Texas were missing out on the most deals in the Midwest and South respectively.
Before analyzing the data, we would have suspected that poorer regions in the United States would be more likely to take advantage of deals and discounts. Since our data suggests that is not the case, we did some more research to try and figure out why poorer regions might miss out on more deals.
COST OF LIVING-THE HIDDEN ANSWER?
After our initial surprise, a reasonable answer presented itself. Sure, maybe shoppers on the coast might make more money. But they also have a much higher cost of living. So even though the average Californian might make more than the average Ohioan, the Californian could still be relatively poorer, and therefore more inclined to actively hunt for deals. That could explain why shoppers in the Midwest and the South, where cost of living is much lower, would be less inclined to search for deals and bargains.
As it turns out, this reasoning only partially explains our findings. After doing a little research, we found that the cost of living in coastal cities is indeed extremely high. As a result, the wages adjusted for cost of living are relatively low. For example, the average hourly earnings in the New York Metro area is high at first glance: $29.42. But, when adjusted for cost of living, that number drops to $18.58. The same pattern applies to the San Diego metro area in California. The average hourly wage there is $26.81, well above the national average. But when adjusted for cost-of-living, that drops to $19.75. The average national adjusted wage was $21.84.(1)
Conversely, some states in the Midwest, like Iowa, have a much more favorable income to cost-of-living ratio. Workers in the Des Moines, Iowa, metro area earned an average wage of $27.54 an hour after adjusting for cost of living, while those in Indianapolis-Carmel, Ind., earned an adjusted average wage of $27.35 an hour.(1)
So even though they make less money in Midwestern states, they are often relatively richer than their coastal counterparts. Here’s a table of how wages adjusted for cost of living break down across the country:
Does not include data from Honolulu, Hawaii
SOURCE: Governing calculations of Labor Department, Council for Community and Economic Research data VIA governing.com
But what about the rest of the South? Unlike the Midwest, most of the South (particularly the Southeast) does not have a great income to cost-of-living ratio. In fact, of the 20 cities with the worst income/cost ratio, 18 of them are in the South. So, on average, Southern citizens are living at a lower relative wealth level than coastal citizens. So why are they missing more of the deals?
DEMOGRAPHICS AND THE TECHNOLOGY GAP
Differences in online shopping habits might explain part of the answer. Shopping online is a great way for many Americans to save money and get the best deals on items they’re buying. And it turns out that the people most likely to shop online— young (especially Millenial) shoppers and shoppers from families making more than $75,000 per year—are also more likely to live on the coasts. (2)(3)(4)
Conversely, poorer, less educated, and older individuals tend not to shop online as much. In fact, many members of this demographic do not use the internet, which helps explain why 20% of Americans report not using the internet at all.(5) The highest concentrations of less educated and poor communities are in the South, which suggests Southerners are far less likely to engage in online shopping. (6)
Moreover, those that do engage in online shopping are more likely to do their online shopping solely from a smart phone. (5) As we detailed in an earlier post, shoppers on smart phones often miss deals and discounts that are displayed only on laptops. This discrepancy in online shopping between the coasts and the rest of the country could help explain why shoppers in coastal states like California and New York were better at finding the best deals on their purchases.
Shoppers who don’t shop online are also much less likely to use price comparison or couponing services—like Shopsavvy, Pricegrabber or RetailMeNot—that can save them money.(5) Even brick-and-mortar stores increasingly use technology to give their customers the best deals. For example, Walmart, the largest physical retailer in the U.S., has a section of its savings catcher app that is allows customers to look up certain items in the store and find the best deals and prices on those items. Target has a similar app called cartwheel that allows users to find deals and coupons for items they might buy in the store. Without using these applications, it can be much harder for customers to take advantage of the best deals.
For whatever technological or demographic reasons, our results suggest that Southern shoppers—many of whom could benefit from deals the most—are the least likely to take advantage of them because they either don’t have access to or choose not to engage with online shopping or other shopping technology.
Regardless of their different reasons for missing the best deals, Midwestern and Southern shoppers are leaving billions of dollars on the table when they shop every year. Even West Coast shoppers are leaving (fewer) billions of dollars unclaimed. This isn’t surprising, since it’s nearly impossible for even the most seasoned shoppers to keep up with the millions of deals, coupons, and price changes offered each day by major retailers. Plus, most consumers either aren’t aware or don’t take advantage of price adjustment and price match policies.
Fortunately, technology now enables consumers to get the refunds they deserve. Paribus, for example, automatically gets users money back when an item they’ve purchased drops in price. Using Paribus, shoppers from coast to coast can buy with confidence, knowing that they aren’t missing any deals and that they’re always paying the best price.