MONEY groceries

WATCH: Market Basket is Still a Mess

Market Basket's situation keeps getting worse with many employees off the job in protest, customers angry at shopping disruptions and some suppliers ending their relationship with the grocery store.

MONEY Shopping

Why Dollar General and Dollar Tree Both Want to Buy Family Dollar

An unusual kind of price war is rocking the world of dollar stores, with two suitors seeking to buy out the same competitor. As you might imagine, a lot of dollars are involved in the competition—nearly $10 billion.

Three weeks ago, when Dollar Tree bid to buy Family Dollar for $8.5 billion, it seemed like more or less a done deal. On Monday, however, the biggest player in dollar stores, Dollar General, offered its own bid for Family Dollar, reportedly in the neighborhood of $9.7 billion. One way or another, it looks like one giant dollar store company will emerge after one of these bids is accepted.

But why are these companies involved in this unusual breed of “price war”? And what does it say about the low end of retail that either of these colossal mergers would make sense?

The dollar store has been one of the great success stories of the recession era, with chains such as Dollar Tree, Family Dollar, and Dollar General posting record sales figures, broad expansions, and soaring stock prices over the past half-dozen or so years. Ironically, though, the merger may be a sign that the era of rampant dollar store growth is plateauing, even while many household finances remain pinched and dollar store shopping continues to be popular.

Here’s a look back at the recent evolution of the dollar store, with a particular focus on why many shoppers have come to view them as handy neighborhood general stores—and not just for cheap stuff.

The Great Recession destroyed shopper budgets. In the late ’00s, the housing bubble burst, the stock market crashed, and the jobs market took an ugly turn. All of the factors combined meant that the free-spending habits developed by consumers in the preceding years would have to be broken and replaced by new strategies to live cheaply. The much-heralded demise of conspicuous consumption spelled trouble for products like GM’s Hummer, but it also meant boom times for low-price retailers—dollar stores especially.

With little money to spend, especially if they’d cut up their credit cards as many had in a move to a cash-only existence, consumers stretched what few dollars they had at dollar stores. Consequently, dollar stores flourished. Dollar General doubled its store locations in the first decade of the millennium, for instance. According to one study, by 2011 there were more dollar stores than drugstores in the U.S.

Dollar stores pushed one-stop shopping. Shrinking American household budgets helped the rise of dollar stores. So did the broad campaign by dollar stores to push beyond the idea that they were good only for junky throwaway trinkets, off-brand canned goods, and anything else that had grown stale on the shelves of mainstream stores.

Among the goods shoppers started seeing more of at dollar stores are groceries, home decorating items, and even beer and wine. In some cases, dollar store offerings have been celebrated as surprisingly chic: A New York Times columnist wrote about his adventures decorating his apartment with dollar store purchases, while the 99-Cent Chef developed a following based on recipes that use ingredients purchased only at 99¢ Only stores. According to one survey from 2010, 18% of shoppers said that they were buying food and drinks for holiday parties at dollar stores.

Chances are, they were also buying wrapping paper and some stocking stuffers at dollar stores too. And that’s the point. When a shopper can buy fresh bread, produce, a gallon of milk, birthday cards, laundry detergent, shampoo, Christmas presents, and maybe a few bottles of cheap Chardonnay at the dollar store, there’s less need to hit the supermarket, liquor store, drugstore, or big box retailer. Dollar stores have been actively promoting themselves as one-stop shopping options with almost anything you need to buy—and with more locations and a smaller, easier, more manageable layout than, say, the nearest Walmart.

They’re not as cheap as you think. While there are undoubtedly some great bargains at dollar stores, shopping experts also advise against the purchasing of certain items there. Like, say, electronics and pots and pans. If you’re surprised that dollar stores even have such items, bear in mind that oftentimes, not everything in a dollar store is priced at $1. Dollar Tree has stuck to $1 pricing for everything in its stores, but Family Dollar and Dollar General don’t bother abiding by the $1 price rule. Among other items, the Dollar General website lists a Craig Android tablet for $78 more than $1.

Dollar stores employ the age-old strategy of drawing shoppers in with bargains and hoping that they grab some other (non-bargain) goods while they’re at it. A Family Dollar spokesperson told the New York Times columnist mentioned above that low-priced cleaning supplies were “almost like the gateway product” for dollar store shoppers. “It starts with cleaning goods,” he said, “and ends up with a bedspread.”

Or perhaps a tablet, or a bottle of wine—which will also cost more than a buck ($2.99 and up, usually, when available.) Shopping centers have been embracing dollar stores in their slight turn upscale because they’re able to attract slightly better-off clientele. But budget-conscious consumers must be careful: In many cases, dollar stores charger higher prices per unit than what’s to be found at Walmart, Target, or a warehouse club such as Costco. It’s just that dollar stores seem like bargains because the items are low quality or they come in exceptionally small sizes. A few weeks ago, a controversy was stirred up when Dollar General offered a special on diapers in “all counts and sizes” that Walmart and Target failed to match, even though they have price matching policies. Why? Because Walmart and Target offer diapers in far bigger sizes than what’s available at dollar stores.

Speaking of Walmart and Target, they’ve slowly been rolling out a counteroffensive to dollar stores by way of smaller retail locations, often in the densely populated urban hubs where dollar stores are ubiquitous. Supermarkets have entered the battle too, with stores that are half the size of the usual grocery shop. The smaller size means these stores can easily fit in a strip mall or city block, making them a lot more convenient and practical for millions of shoppers.

So now we have a situation in which dollar stores do what Walmart and Target do best by stocking groceries, electronics, and a little bit of everything, and Walmart, Target, and grocery chains do what dollar stores do best by offering small, convenient locations (and more of them) and many bargain-priced goods. The retail lines are blurring. Every player wants to be the convenient, one-stop shopping destination for shoppers, and it has gotten much tougher for a dollar store or any retailer to stand out. When it’s hard to differentiate yourself in the marketplace, and it’s hard to grow, it’s probably time to combine with someone in the same boat to help you compete.

That’s what seems to be why both Dollar Tree and Dollar General want to buy Family Dollar. In today’s ultra-competitive marketplace, a merger represents their best chance to grow, or at least survive.

TIME Retail

This Company Wants to Kill Your Supermarket

Aisle at supermarket with shopper and shopping cart
Aisle at supermarket with shopper and shopping cart Diana Angstadt—FlickrVision

Farmigo, a small farm-delivered food service, has an audacious dream

fortunelogo-blue
This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

Benzi Ronen thinks that the supermarkets’ time is up. And his company is just the thing to speed up its demise.

“Our goal is to make the supermarket obsolete from a fresh perspective,” Ronen says.

Farmigo, his five-year-old 30-employee startup, sells produce and other products like milk and cheese purchased directly from farmers for 10%-20% less than equivalent grocery store items. He does it by shrinking the supply chain, essentially taking out the middleman. Users place an order online; the order is fulfilled by a farmer who transports it to a centralized packing hub; and then Farmigo delivers it to community drop-off points for the customer to pick up. This all happens within 48 hours.

“We don’t have a retail store,” Benzi explains. “We get rid of all of that. We source just in time.” That means there’s no waste and produce is brought directly from harvest.

Other sellers, such as Fresh Direct, also cut out the physical store. But Ronen argues that they’re just an extension of the supermarket model, with similar warehouses that keep a huge inventory on hand. By contrast, Farmigo’s hubs are filled exclusively with product that’s just been delivered by farmers and is going out for delivery.

“Our entire food system is based on economies of scale,” he explains, adding that it has contributed to the hub-and-spoke distribution model in which food travels hundreds of miles and can sit on shelves for weeks. “You don’t get fresh in supermarkets, and you also have waste,” he says.

For the rest of the story, please go to Fortune.com.

 

MONEY E-Commerce

3 Ways Walmart Is Trying to Out-Amazon Amazon

140805_HO_OutAmazon
Okko Oinonen/GalleryStock

Walmart might look like the sleeping giant of e-commerce, but it has one surprising advantage in the online space.

On Monday, Walmart announced a major overhaul of its e-commerce offerings. The brick-and-mortar Goliath plans to add new features to its website in the coming months, including more personalized product recommendations, discounts available in the user’s local store, and significantly faster check-out. The moves are presumably aimed at making Walmart more competitive online with Amazon, the other dominant force in American retail.

Walmart still dwarfs Amazon in terms of total revenue, having pulled in $473 billion in 2014 compared to Amazon’s mere $60.3 billion. But Walmart’s been woefully slow to embrace online commerce, a realm where Amazon outsold the biggest-box retailer seven-to-one last year. And the larger trends have to concern the executives in Bentonville: E-commerce in the U.S. grew at about six times the rate of conventional retail over the past year.

On the other hand, Walmart is hardly the sleeping giant that it’s often portrayed as. A closer look at the company’s moves in recent years reveals a slow but consistent effort to catch up to Amazon’s online offerings. That effort is starting to pay off: Walmart’s online sales grew 30% in the 2013 fiscal year, to $10 billion. (Amazon’s online sales started at a much higher number, but grew “only” 20% during that time.)

Meanwhile, Walmart may have an ace in the hole — in the form, ironically, of its 4,900 U.S. retail outlets. Generally seen as a symbol of Walmart’s lumbering inability to adapt to the digital world, those stores may prove to be Walmart’s one big advantage in the online space.

Here are three ways Walmart is trying to turn up the heat on its major e-commerce adversary.

1. A Better Online Experience

Walmart’s Monday announcement was entirely web-centric, and focussed on an area that has long been one of Amazon’s great strengths: usability. Amazon pretty much invented one-click shopping, and has the patent to prove it. Meanwhile, users of Walmart’s old site had to go through six pages before they were allowed to click the buy button. That’s not how you win customers from the market leader. The new Walmart site, which is being rolled out gradually (about half of Walmart.com’s visitors have been using a portion of its new features), makes major strides in this area by turning the buying experience into a simple, one-page process.

Walmart will also be introducing a custom recommendation engine that serves users with customized product suggestions based on past searches, purchase history, and location. This personalization even extends into the brick-and-mortar stores by showing customers deals and coupons that they can cash in at nearby Walmart locations.

walmart
Walmart’s new site is trying to let you buy what you want in as few steps as possible.

2. Same-Day Delivery

Amazon, eBay, and other e-retailers know their next big opportunity for growth — and the one huge disadvantage they face vis a vis brick-and-mortar stores — is the human desire for instant gratification. Overnight delivery is great, but if your iPad/TV/groceries are just a five-minute drive away, even the next day can seem like too long to wait. As a result, Amazon has been spending through the nose to build the infrastructure necessary to make same-day delivery a reality. Already, Bezos and Co. offer it in 12 metro areas.

That might sound like a lot, but Walmart has the potential to put Amazon’s same-day coverage to shame. The chain has thousands of locations across the country, and has long advertised a “Site-to-Store” feature that allows customers to order online and then pick up their order at a nearby Walmart location right away. Lately, the company has been putting increased effort behind this hybrid digital/conventional form of retail: The number of products available for same day pick-up has tripled in the past 18 months. And having a store with an actual cashier also means Walmart customers who purchase online can choose to pay for their order in cash.

If the item isn’t on shelves at the moment, Site-to-Store also replicates (and pre-dates) one of Amazon’s most useful features, Amazon lockers, by allowing customers to order nearly any item and have it delivered to a store location.

So why isn’t Walmart dominating when it comes to delivery? Well, it turns out that executing on the promise of same-day delivery isn’t so easy. Amazon Prime typically still beats Walmart shipping times on all but a select few products. But Walmart is getting better. The chain has rolled out traditional save day delivery in an increasing number of test markets, and according to spokesman Dan Toporek, has begun building out its next-generation order-fulfillment network in which online fulfillment centers work in concert with distribution centers and stores that are set up to deliver web orders to create shorter delivery times.

3. War For Your Groceries

While everything from calling a cab to shaving has been disrupted by an online ordering model, stocking up on groceries has remained a chore most of us still have to do in person. But Amazon and Walmart have been one-upping each other in recent years to change that. Amazon made the first move, having launched AmazonFresh in 2007, enabling customers to order meat, veggies, and comestibles the same way they would a new printer. Initially available only to those in the Seattle area, Fresh has expanded into Northern and Southern California.

But Walmart has battled back with Walmart To Go, which the company tested in San Francisco for three years and recently expanded to the Denver area. What’s more, To Go has at least one advantage that Amazon can’t yet offer: Shoppers can order online and then pick up in stores. Walmart claims this as a real competitive advantage: Fifty-five percent of those surveyed supposedly told the retailer that they prefer to pick groceries up themselves so they can grab any forgotten items on the way through the checkout.

Still the Underdog… For Now

Make no mistake, Amazon is still king of the online retail space, and looks likely to retain its crown for the foreseeable future. But Walmart’s online redesign and roll-out of Amazon-like features that leverage its army of stores, make it a force that no one can ignore, especially as Amazon looks less focussed than ever on its core e-commerce business.

Either way, when two giants like Amazon and Walmart fight, the consumer tends to win.

MONEY Shopping

Why We Spend So Many of Our Dollars at Dollar Stores

99 cent sign
joeysworld.com—Alamy

And why the $8.5 billion Dollar Tree–Family Dollar deal is probably a sign that the dollar store's heyday is coming to an end

The dollar store has been one of the great success stories of the recession era, with chains such as Dollar Tree, Family Dollar, and Dollar General posting record sales figures, broad expansions, and soaring stock prices over the past half-dozen or so years. Now that Dollar Tree is purchasing Family Dollar for $8.5 billion, it appears as if the era of rampant dollar store growth is plateauing, even while many household finances remain pinched and dollar store shopping continues to be popular.

How did we get to the point where such a colossal merger would make sense? Here’s a look back at the recent evolution of the dollar store, with a particular focus on why many shoppers have come to view them as handy neighborhood general stores—and not just for cheap stuff.

The Great Recession destroyed shopper budgets. In the late ’00s, the housing bubble burst, the stock market crashed, and the jobs market took an ugly turn. All of the factors combined meant that the free-spending habits developed by consumers in the preceding years would have to be broken and replaced by new strategies to live cheaply. The much-heralded demise of conspicuous consumption spelled trouble for products like GM’s Hummer, but it also meant boom times for low-price retailers—dollar stores especially.

With little money to spend, especially if they’d cut up their credit cards as many had in a move to a cash-only existence, consumers stretched what few dollars they had at dollar stores. Consequently, dollar stores flourished. Dollar General doubled its store locations in the first decade of the millennium, for instance. According to one study, by 2011 there were more dollar stores than drugstores in the U.S.

Dollar stores pushed one-stop shopping. Shrinking American household budgets helped the rise of dollar stores. So did the broad campaign by dollar stores to push beyond the idea that they were good only for junky throwaway trinkets, off-brand canned goods, and anything else that had grown stale on the shelves of mainstream stores.

Among the goods shoppers started seeing more of at dollar stores are groceries, home decorating items, and even beer and wine. In some cases, dollar store offerings have been celebrated as surprisingly chic: A New York Times columnist wrote about his adventures decorating his apartment with dollar store purchases, while the 99-Cent Chef developed a following based on recipes that use ingredients purchased only at 99¢ Only stores. According to one survey from 2010, 18% of shoppers said that they were buying food and drinks for holiday parties at dollar stores.

Chances are, they were also buying wrapping paper and some stocking stuffers at dollar stores too. And that’s the point. When a shopper can buy fresh bread, produce, a gallon of milk, birthday cards, laundry detergent, shampoo, Christmas presents, and maybe a few bottles of cheap Chardonnay at the dollar store, there’s less need to hit the supermarket, liquor store, drugstore, or big box retailer. Dollar stores have been actively promoting themselves as one-stop shopping options with almost anything you need to buy—and with more locations and a smaller, easier, more manageable layout than, say, the nearest Walmart.

They’re not as cheap as you think. While there are undoubtedly some great bargains at dollar stores, shopping experts also advise against the purchasing of certain items there. Like, say, electronics and pots and pans. If you’re surprised that dollar stores even have such items, bear in mind that oftentimes, not everything in a dollar store is priced at $1. Dollar Tree has stuck to $1 pricing for everything in its stores, but Family Dollar and Dollar General don’t bother abiding by the $1 price rule. Among other items, the Dollar General website lists a Craig Android tablet for $78 more than $1.

Dollar stores employ the age-old strategy of drawing shoppers in with bargains and hoping that they grab some other (non-bargain) goods while they’re at it. A Family Dollar spokesperson told the New York Times columnist mentioned above that low-priced cleaning supplies were “almost like the gateway product” for dollar store shoppers. “It starts with cleaning goods,” he said, “and ends up with a bedspread.”

Or perhaps a tablet, or a bottle of wine—which will also cost more than a buck ($2.99 and up, usually, when available.) Shopping centers have been embracing dollar stores in their slight turn upscale because they’re able to attract slightly better-off clientele. But budget-conscious consumers must be careful: In many cases, dollar stores charger higher prices per unit than what’s to be found at Walmart, Target, or a warehouse club such as Costco. It’s just that dollar stores seem like bargains because the items are low quality or they come in exceptionally small sizes. Just last week, a controversy was stirred up when Dollar General offered a special on diapers in “all counts and sizes” that Walmart and Target failed to match, even though they have price matching policies. Why? Because Walmart and Target offer diapers in far bigger sizes than what’s available at dollar stores.

Speaking of Walmart and Target, they’ve slowly been rolling out a counteroffensive to dollar stores by way of smaller retail locations, often in the densely populated urban hubs where dollar stores are ubiquitous. Supermarkets have entered the battle too, with stores that are half the size of the usual grocery shop. The smaller size means these stores can easily fit in a strip mall or city block, making them a lot more convenient and practical for millions of shoppers.

So now we have a situation in which dollar stores do what Walmart and Target do best by stocking groceries, electronics, and a little bit of everything, and Walmart, Target, and grocery chains do what dollar stores do best by offering small, convenient locations (and more of them) and many bargain-priced goods. The retail lines are blurring. Every player wants to be the convenient, one-stop shopping destination for shoppers, and it has gotten much tougher for a dollar store or any retailer to stand out. When it’s hard to differentiate yourself in the marketplace, and it’s hard to grow, it’s probably time to combine with someone in the same boat to help you compete. That’s what seems to be happening with Dollar Tree’s purchase of Family Dollar.

MONEY Workplace

Meet America’s Most Beloved CEO—Too Bad He Just Got Fired

120723_FF_MarketBasket_1
AP

After the wealthy CEO of a supermarket chain was fired, thousands of workers walked off the job in protest—some getting fired themselves. What's up with that?

Workers understandably tend to go on strike or protest for selfish reasons—more pay, better benefits, improved working conditions. Over the last week in New England, however, thousands of employees at Market Basket, a supermarket chain with 71 stores in New Hampshire and Massachusetts, have been sticking their necks out (and in some cases putting their jobs on the line) in support of Arthur T. Demoulas, who was the company CEO until he was fired in June.

Rallies pushing for “Arthur T.” to be given his job back were held at the Market Basket headquarters in Tewksbury, Mass., on Friday and Monday, drawing upwards of 5,000 protestors. Meanwhile, the shelves of many Market Basket locations have gone barren, as there are too few employees still on the job to stock them. At least eight employees were fired over the weekend related to the protests.

“I have no regrets—I would do it all over again, and I leave the company I love with my head held high in the knowledge that there wasn’t a single thing more that I could have done,” said Tom Trainor, a Market Basket district manager who was one of the leaders of the protest, and who was fired, according to Boston Magazine. “I knew the risk but I also knew that I was fighting for something much bigger than myself. I was fighting for my family, for Arthur T. Demoulas, a man that I have tremendous respect, loyalty, and admiration for.”

In an era overrun with CEO hate and 1% bashing, such comments—and the actions of all those who have put their jobs in jeopardy—are nothing short of astonishing. When CEOs are in the news nowadays, it’s often because of things like their astronomical pay packages, or that they’ve insensitively laid off thousands of employees in a memo.

The backstory of how Arthur T. Demoulas was ousted in June, alongside a pair of other experienced high-level executives for the family-owned company, is a complicated tale. The CEO was fired by a board led, believe it or not, by his cousin, Arthur S. Demoulas. Apparently the family has been feuding about control of the business for years, with the battles for power including tactics that seem like they would only be found in fiction—fake identities, secretly taped meetings, and more.

Amid the struggles for control, it’s overwhelmingly clear where employee loyalty lies. Arthur T. was known for treating employees, who were not unionized, particularly well, with good benefits and above-average pay. More important, he was renowned as something exceptionally rare in high-power executive ranks: He’s just a good guy. During the rallies, employees spoke often about Arthur T. always having time for his workers, including frequent attendance at their family weddings and funerals.

“He’s George Bailey,” Trainor explained to the Washington Post, comparing Arthur T. Demoulas to the beloved savings-and-loan manager played by Jimmy Stewart in It’s a Wonderful Life. “He cares more about people than he does about money.”

That’s probably not something they teach in business school. Nonetheless, several academics have been monitoring the Market Basket situation, and they’ve noted that many lessons can be learned about how the controversy is playing out. Michael Roberto, a management professor at Rhode Island’s Bryant University, wrote that “every CEO should wish that his or her employees would stand up so forcefully for them even at great personal risk.”

The board that ousted Arthur T. and fired the employees leading protests, on the other hand, seems to have its priorities wrong, and seems tone deaf to how this plays with the public. “The Board has badly miscalculated by firing managers who objected to the CEO’s dismissal. It only added fuel to the fire,” noted Roberto. They also drastically underestimated the importance of maintaining company values and low employee turnover, Roberto wrote.

Market Basket’s current leadership has defended its actions in a few statements released to the media this week. “The individuals who were terminated took significant actions that harmed the company and therefore compromised Market Basket’s ability to be there for our customers,” read a statement from co-CEOs Felicia Thornton and James Gooch. A later statement urged employees to return to work, according to the Boston Herald:

“We strongly encourage all associates to return their focus to Market Basket’s customers, their needs and expectations,” co-CEOs Felicia Thornton and James Gooch said in a statement. “We understand the strain and emotion facing Market Basket associates. … We are committed to earning the trust and acceptance of our associates and Market Basket’s customers and hope that our associates will judge us not on our promises, but on our actions as we move forward.”

Nonetheless, the situation appears to be damaging Market Basket’s relationship with employees and customers alike, who naturally sympathize with their middle-class peers who have walked off the job to support a beloved good-guy CEO. And one who, Boston columnists have noted, has made sure over the years that groceries are fresh, of good quality, and priced low. As of Wednesday, the Save Market Basket Facebook page, in support of Arthur T., had close to 60,000 Likes, more than double the total one week ago.

“The employees and the customers — they see themselves as the organization,” Daniel Korschum, a marketing professor at Drexel University, explained to the Washington Post. And they therefore feel a sense of ownership and responsibility for Market Basket. “The board and the new CEOs are seen as the outsider. It’s the exact opposite of what you usually see.”

Risking one’s job to save that of your boss, rather than going about your business or even pumping your fist when a high-paid CEO gets canned—that’s also the exact opposite of what we expect to see. But under the current circumstances at Market Basket, things make more sense.

“It’s been a very difficult time for the hard-working associates of the company this past few weeks,” Arthur T. Demoulas said on Monday, after remaining mostly quiet regarding the protests, according to the Boston Globe. He called for the company to rehire the employees who were fired, immediately. “I love these people very much.”

Another rally in support of Arthur T. Demoulas is planned for Friday, again at the company headquarters in Tewksbury, Mass.

MONEY My Money Story

LISTEN: I Got Paid to Iron Shirts While a Stranger Watched

My Money Story is a biweekly podcast. We tell one person's story of overcoming an obstacle (big or small) to achieve a dream - or simply pay the rent.

Julie Staadecker was 20-years-old, studying at Boston University and broke. To make some extra cash, she would pick up odd jobs — like catering or moving furniture. One day she stumbled across a job asking for a shirt iron-er, which turned out to be the most bizarre odd job she’s ever had.

Music: “Try This On For Size,” by Brian Wayy and “Hipnotyzed,” by Kojo Linder

MONEY Budgeting

3 Ways to Inflation-Proof Your Life

140710_HO_Inflation_1
Jason Hindley

The official inflation rate is low, but your personal CPI may be high. Keep it grounded with these moves.

Since the Great Recession, inflation has been unusually low, inching along at well below the 3% historical average. And over the past 12 months, the consumer price index has clocked in at a ho-hum 2.1%. But you are not the U.S. economy, and the costs of being you haven’t stagnated.

In some cases, that’s a good thing. If you’re in the market for a new TV or computer, for instance, you’ll pay dramatically less than you would have five years ago (see chart, below). Yet during the same period, prices of many of the biggest and most common expenses families pay, from child care and health care to key grocery items, have shot up. Meanwhile, in real terms, salaries are stuck in molas­ses, so consumers have roughly the same income as they did before Lehman Brothers collapsed.

Use these moves to keep price increases from eroding your paycheck.

Costs of Raising Junior

Strategy: Let Uncle Sam help. Diapers, summer camp, and orthodontia may be budget killers. But the biggest strain on parents comes from two expenses: child care (up from an average $87 a week in 1985, adjusted for inflation, to $148 now) and college (tuition and fees for state schools: up 27% in real terms since 2008).

Tax breaks can help you reduce those costs. Got children under 13? Sign up at work for a dependent-care flexible spending account to use pretax dollars to pay for up to $5,000 of child-care bills, says J.J. Burns, a Melville, N.Y., financial planner. That saves you up to $1,400 in the 28% bracket.

Your company doesn’t offer the FSA, or your costs exceed the limit? Claim the child-care tax credit on your 1040 for up to $3,000 in bills for one kid, $6,000 for two. A married couple filing jointly with adjusted gross income (AGI) over $43,000 can write off 20% of bills up to these amounts.

As for college, saving via your state’s 529 plan may put money back in your pocket, says Savingforcollege.com founder Joseph Hurley; check “What’s the Best 529 Plan for Me?” to see if that’s true for you. Contributions grow tax-free and are fully or partly deductible in 34 states and D.C. (withdrawals are tax-free in every state). Plus, once your child is in school, you may qualify for the American Opportunity Tax Credit on tuition and fees worth as much as $2,500 and a deduction of up to $2,500 on student-loan interest.

Everyday Expenses

Strategy: Find a cheaper substitute. If you grilled hamburgers this Fourth of July, then you already know about skyrocketing meat prices. And that’s not all: The prices of car insurance, butter, milk, and eggs have all risen at double or triple the CPI. For gas, make that sevenfold.

Solution? Substitute a lower-cost item or supplier that can fill the same need. Trade T-bones for chicken breasts—the price of which has tracked inflation the past five years. Reach for a glass of wine (down 2% over the past five years) instead of a bottle of beer (up 9%).Then take the strategy wider. Carpool to work or use public transit to save on gas. And shop around for a cheaper auto insurer.

Health Care Costs

Strategy: Comparison-shop. Workers’ contributions to health care premiums have climbed 26% in real terms since 2008, based on data from the Kaiser Family Foundation. Prescription: Compare prices, which vary widely even in-network for doctors, services, and drugs. By logging on to your insurer’s web tool you can save thousands on MRI and CT scans, specialists, and physical therapy.

Also, to avoid big bills later, take advantage of free preventive care like physicals, which most plans must now offer, says Katy Votava, president of Goodcare.com, a health-plan consultancy. You can’t do much better than paying zero.

What's cheaper

MONEY Food & Drink

Your 4 Favorite Things to Eat & Drink Are Getting More Expensive

Stack of steaks
Karen To—Getty Images

It's as if the powers that be are conspiring against the Ron Swansons of the world: Prices for coffee, beef, bacon, and whiskey are all on the rise.

Man’s man Ron Swanson, the wonderfully mustachioed anti-government government worker on “Parks and Recreation,” played by Nick Offerman, is known for his love of meat, whiskey, and breakfast. The fictional Swanson—and anyone who can identify with the character’s taste—will certainly not love what’s happening to the prices of some of his beloved food and drinks.

Coffee
On Tuesday, Starbucks raised prices on some coffee drinks, and bags of Starbucks coffee sold in supermarkets will be more expensive soon too. Medium and large-size coffees saw prices hikes of 10¢ and 15¢, respectively, while a bag of Starbucks beans will be about $1 more in the near future.

Starbucks joins coffee giants such as J.M. Smuckers, maker of brands Folgers and Dunkin’ Donuts bagged coffee, and Kraft Food Groups (Maxwell House), as well as Dunkin’ Donuts stores themselves, which have all recently increased prices or announced plans to do so this summer. The price hikes are being blamed on a drought in Brazil that will reduce the global supply of coffee beans.

Bacon
In addition to coffee, the price of another staple on the American breakfast table is on the rise: beloved bacon. At the beginning of 2014, word started spreading of a pig virus that was decimating the pig population on North American farms—and that would likely cause a surge in bacon prices down the line.

As any bacon lover who pays close attention to supermarket prices can attest, the increase is now in full effect. Industry publication Burger Business noted that the average retail price for a pound of bacon at the supermarket reached $6.05 recently, an 18.8% rise compared with May 2013.

Beef
Beef prices have been on a tear for months, largely as a result of a long drought and soaring demand. Thanks to a shrinking supply of cattle, according to Bloomberg News, ground beef prices are at a record high, after rising 76% since 2009.

Prices for all cuts of steak have been soaring as well, which has translated not only to higher grocery bills for shoppers, but pricier menus at steakhouses and fast food establishments. Chipotle, McDonald’s, and In-N-Out Burger have all hiked menu prices recently as a response to broader trends in the cattle industry.

Whiskey
After the reality of all of those price hikes sets in, you’re going to need a drink. Appropriately, it too will cost more in the near future if your drink of choice is whiskey.

A bourbon shortage and the merger of two global giants in whiskey are among the reasons that prices of the popular spirit are expected to head skyward, and soon.

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