Impact Investing: Safeway’s $10 Prefilled Holiday Drive Bags: Savings or Scam?

Investing

By Susan Lyon

If you walk into a Bay Area Safeway this holiday season, you’ll see a pyramid of brown bags packed full of groceries awaiting near check out, labeled “$10: Help Us End Hunger.”

It’s a nice sentiment, to be sure.  Shoppers are encouraged to buy a $10 bag of groceries to donate to Second Harvest Food Bank as part of Safeway’s holiday food drive; we are told this is enough to feed an entire family.  Safeway explains that all you have to do is purchase a bag at checkout, and then drop it off in a donation bin located just on the other side of the cashier.

Easy win-win, right?  Let’s take a closer look.

What’s the True Value of the $10 Donation Bag?

We took a look at what’s in the bags and the prices of each packed up item individually to explore further.

We bought each item separately and then did the math.  The total cost of purchasing all items independently was $11.59 so it turns out you can save $1.59 in savings, or slightly less if you don’t need the paper bag, if you buy them collectively in the $10 bag.  By buying these groceries pre-packaged together, you save good money whether you want to donate them to a food bank or not.

Here’s what was in our bag we purchased:

Food Product In Bag: USD ($)
Can of Corn

0.79

Can of Cranberry Sauce

1.00

Can of Diced Tomatoes

0.89

Bag of Rice

1.49

Box of Spaghetti

1.00

Box of Macaroni & Cheese

0.84

Box of Stovetop Stuffing

1.99

Box of Saltines (large)

3.49

Brown bag fee

0.10

Total

$11.59

(Est. Total Using Club Card)

($10.60)

It turns out, ironically, that shoppers can actually save some money on these grocery items – whether they’re buying them for themselves or for others.Note that most of these are generic brand names, rather than fancier brand names, of course.  (The mac & cheese we got isn’t even Kraft brand!)

Beware of Grocery Store Markups: Is Safeway Still Profiting?

Safeway is charging $10 a bag for what would otherwise cost $11.59 (without a Club Card) – but we don’t think it’s purely out of the goodness of the grocery giant’s heart.  This is indeed not the most altruistic endeavor in the history of mankind.

Are they just offloading excess inventory that consumers aren’t buying?

Either way, Safeway is still making a profit on these goods being sold because the company is not selling them at or near at-cost values.  From historical averages, we already know that grocery store markups are huge.  Cereal is marked up on average 44%, with canned goods being one of the least marked up products at 26%, because they last.

It cost Safeway a lot less than $1.49 to stock that bag of rice.

That said, Safeway is going through a rough patch with shaky financials and slim profit margins over the last year.  Grocery store competition is fierce, and the company is trying to stay on stable ground.

Better Than Nothing: Why the Psychology of Giving Matters

Yes, Safeway’s holiday giving campaign is better than nothing.  The main reason why is that the physical presence of the donation bags near checkout reminds customers that otherwise might forget that they’d been meaning to donate or do something charitable, however small.

It’s similar to the principle behind the “would you like to donate $1 to cancer research” button that now appears when you swipe your card at various groceries and drugstores.  It’s just as easy to say yes as no – it’s (nearly) just as easy to donate as to not.  The psychology of giving is fascinating; people do better when presented with easy, concrete options. 

Other Factors to Consider When Donating:

If you weren’t sold on the $10 bag idea like we weren’t, consider donating food in one of these other highly effective ways.

  • Find the Most Efficient Way to Donate to Your Cause of Choice: Making a financial donation to your local food bank is the best way to go per dollar spent, because you can make sure your money is being allocated exactly as it’s needed by those who run the organization of your choosing.  Also, you save the time of others having to sort through all the donated food making sure it hasn’t gone bad.  That said, if you’re trying to clean out your pantry, those donations are much appreciated too!
  • Know What’s Needed the Most: Learn what food banks are most in need of this holiday season.  They always need dry non-perishables as well as most canned foods.
  • Consider the Health of the Food Being Donated: Underprivileged Americans need to eat right, too.  We think Safeway could have done better than the bag full of highly processed carbs they’re sending to food banks.

To learn more, donate online, or volunteer with Second Harvest Food Bank this holiday season, please visit: http://www.shfb.org/

To find other places to donate food, please visit Feeding America’s Food Bank Locator.