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Comment by huffpopo | Hacker News Reader

Retailers who ask customers if they would like to donate to charity after a sale are using it as a test to see if they can raise prices.

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I don't think grocery retailers "raise prices" across the board.

I think the "charity bundling" concept is just for P.R. The company presents the big check at the end of the campaign, and the public then credits the company, even if the company itself contributed nothing beyond a little (deductible) personnel time.

The Ronald McDonald House perfected that mechanism. Some retailers used to do the same with pooling customer MDA donations, then showing up to the telethon with a big check... with the company name on it.

BTW, I'm not opposed to this mechanism if the retailer is matching customer contributions.

Often they tout that donations are matched. In the fine print, they disclose that there's a limit to the matching. So if the limit is low, then the "matching" concept is effectively illusory.

Do you know this, or are you assuming this? It is certainly possible that, at the margin, someone is willing to spend money on a charity but not spend that same money on the product. Although I suppose there's probably a correlation between donating and willingness to pay more.

It’s a way to test shoppers and evaluate their willingness to add a marginal dollar for spending. That can be correlated against buying behavior and taking advantage of discounts.

Right now, for a grocery store, that means they can put butter on sale that women will buy for Christmas cookie making, and market sprinkles and decorative sugar at higher prices (or with a coupon) to increase customer value. That MDA heart that you bought on Labor Day weekend helps assess the effectiveness of that sort of promotion.

I really like Trader Joe's that does not do all of this segmented pricing, sales, and coupons. I wonder if they can survive without all that in the long run. Maybe with having mostly store brands it will work out for them.

ALDI (the company behind Trader Joe’s) has been doing without ads, segmented pricing, or coupons for half a century and became one of Europe’s largest retailers.

I’m sure they’ll stay competitive in the future.

In their German home turf they started a huge ad campaign last year (their first ever except for a weekly newspaper ad) and even started to discount some of their regular product lines. Maybe the days they could survive without all that are over?

ALDI Süd has, yeah, but afaik ALDI Nord only launched some ad campaigns in the past days, right?

And from what I know, that’s less about survival, and more that they can’t expand horizontally anymore, and the new owners (the Albrechts both died in the past years) also want to expand vertically into other market segments.

They both started about a year ago with a huge budget for ads online, on TV, on radio, on billboards, and in cinemas. They haven’t really talked about their decision (they never do). They lost a lot of market share to other supermarkets and especially to the heavily-advertising Lidl. Surely the new managers played an important role in that decision. In other countries they always advertised.

I know they’ve experimented for a while, but I don’t think Nord launched a major ad campaign until recently.

Supermarktblog documents these changes quite well, IMO.

https://www.supermarktblog.com/2017/10/02/aldi-nord-in-renov...

The Aldi Nord campaign launched last year. I remember because I'm amazed by the campaign's bad typography whenever I see one of the posters in a shop.

That seems like a very weak and noisy signal compared to, you know, directly changing prices, which they do all the time.

Changing the price first has the disadvantage of possibly losing the sale.

Going by industry gossip it is a very strong signal. Strong enough to be worth while even though they know customers hate it.

But this is data for an INDIVIDUAL person!

Do you have a citation for this? What is this statement based on?

They also use it as a tax write off...

How? It's not their money in the first place so collecting deducting it just goes back to zero.

Does the money go directly to a charity? Or do they collect it on behalf of a charity and then donate it to said after end of business (or 4-8 weeks)? Electronic transactions are abused far more by companies/corporations compared to kids picking up a water jug of pennies.

I'm sure they collect it for a while, but that doesn't mean they can declare it as their own for tax purposes.

I'm not so sure about that. Citation? I believe in general (at least in the US), it would be really unusual for a corporation to get a tax break for money that was never theirs. The chief factor in how corporations are taxed in the US is their domestic profit. Whether you donate to charity or light it on fire, it shouldn't matter at all to the corporation's profit, and therefore it shouldn't matter to their taxes.

I'm happy to be convinced otherwise, though. Let me know.

(former) tax lawyer here. This is definitely not possible, at least in the US. They could only take a deduction if they first recognized the donation as income — which would defeat the purpose and also be a very odd way of characterizing the transaction.

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