The world is well aware of the fact, how expensive the cost of living is in the Bay Area. Everything from housing to cocktails have a higher price tags than other parts of the United States.
But according to a new study conducted by a retail sales research firm ‘Observa’ found, while accounting for different income level groups. That you are better off shopping in the Bay Area for some items than in other metro cities.
For example it costs 396% more to buy healthy groceries in New Orleans than Palo Alto and that for parents shopping for newborn, products cost 215% more in Tucson than in San Francisco.
Observa CEO Hugh Holman said: “What we found is there is a discrepancy in cost once we take into account average income.”
Observa analyzed more specialized basket of goods by looking at the prices of goods that fit into certain lifestyles such as healthy foods, baby products, and items for retirees and older citizens.
The costs of the goods vary among the cities and brands. Some brands price items the same across the country, while the others price them differently. Few goods are marked by the retailers and not necessarily by the brand.
But, by using the median income in each area according to the Census Information of the U.S., Observa compared and showed the percentage of the typical paycheck it takes to buy those products.
Organic bananas cost 89 cents in New Orleans and 99 cents in Palo Alto, the difference is not huge, but cuts into the average household income, which is $36,792 per year in New Orleans and in Palo Alto it is $136,519.
“Because real estate in the Bay Area is expensive, conversation tends to drift towards all your expenses. But in reality, it can be cheaper for people to eat healthy in a place like San Jose,” Holman said. “It’s not what I expected to see; I thought it would more expensive in high-income areas because the market can bear more expensive goods.”
Demand for healthy products is growing in the nation. More than 28% of people buy organic products on a regular basis. But in New Orleans the percentage of income required to buy organic food is 11.1%, while in Palo Alto it is just 2.8% and 5.0% in San Francisco.
The average spending on baby products requires 8.8% of the median income in Tucson, while it is 6.1% in Boston and 4.1% in San Francisco.
The report is the first segmented basket of goods study by Observa, which plans to expand the study to more cities and to different lifestyle segments.
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