Giant Ends Share Slide in Baltimore

Discussion
Jun 19, 2009
George Anderson

By George Anderson

In a RetailWire poll in April, 27 percent said Stop
& Shop and Giant Foods’ Value Improvement (price freeze/cut) Program
would lead consumers to have a perception that the chain’s prices were somewhat
or much lower than the competition. Forty-two percent said the program would
lead to the perception that the chains were price competitive with others
merchants in their markets.

It appears, at least in the Baltimore market, that price cuts combined
with store remodels have helped Giant achieve market share gains for the
first time in six years.

According to Food World, Giant increased its share
from 27.48 percent to 27.58 percent in the 12-month period ending March
31. Giant stores generated $1.27 billion in sales for the period
compared to $1.26 billion the year before.

Jeff Metzger, publisher of Food World, attributed Giant’s
gains to its price cuts.

"If there’s one thing this economy has taught us, it’s
that you’d better move price up a few places in your lineup, even if you’re
not a ‘price’ operator,"
Mr. Metzger wrote.

Safeway took second in the Baltimore area. The chain saw its
share of market grow from 16.09 percent to 16.39 percent.

Craig Muckle, a spokesperson for Safeway, told The Baltimore
Sun
, "The fact that we have gained market share, not only this
year but in previous years, demonstrates that our lifestyle format is
being very well received by our customers."

Discussion Questions: Does the market
share improvement in Baltimore suggest to you that other grocery chains
should concentrate more on their price positioning? What will Giant
need to do next if it wishes to build on its market share gain over the
last year?

Please practice The RetailWire Golden Rule when submitting your comments.

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9 Comments on "Giant Ends Share Slide in Baltimore"


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Joan Treistman
Guest
11 years 10 months ago

I’m not convinced the article has enough information to conclude that pricing and in-store changes are what account for Giant’s increase in share and revenue increase.

Consumers are eating at home more and shifting away from higher priced alternatives in many categories. It is therefore possible that Giant would have seen these shifts without making any changes.

However, moving the position of price in the strategic line up for food retailers makes a lot of sense. The economy has sensitized us all regarding how many meals we can prepare at home for the same dollars spent a year ago, six months ago, etc.

Store interiors are the long-term strategy. Whenever a retailer provides consumers with a positive experience, the seeds have been planted for return visits.

In sum, I’m not certain what Giant should attribute its gains to. However, pricing and shopping experience deserve to be high on the list of retailers’ strategy for immediate incremental sales and long-term success.

David Livingston
Guest
11 years 10 months ago

I don’t think I would be celebrating a .1% gain in market share. Especially since there is a margin of error factor in which they could have actually lost market share. Sounds like a lot of cap-ex just to remain even.

So where is Walmart on this list? Just wait until they start rolling out the supercenters. That will be a brutal and crushing blow, and my guess is Giant will end up like other Ahold divisions such as Tops, Bruno’s and BI-LO.

For Giant to slow the loss of market share, they will need to focus on gaining what they can from competitors that are even more vulnerable. A&P’s Super Fresh is ever falling closer to a zero share as are a few other local chains. Wegmans views Giant, Safeway, Delhaize, Supervalu, and A&P as ineffectual retailers, so I would expect them to continue opening stores in the area. We have to be realistic and not talk in terms of gaining share but rather slowing the decay.

Bill Bittner
Guest
Bill Bittner
11 years 10 months ago
There is no way to draw any conclusions from the numbers presented. Without any measurement of variation, it is impossible to tell whether the numbers are significant. There is one important number that is missing: “Are they making any money?” I have seen over and over how consumers are able to sniff out bargains that are “too good to be true” and drop a retailer as soon as margins return back to sustainable levels. I believe prices can draw customers but they can’t keep them because the discounts become unaffordable. This is where the remodels come into play and a fresh look for the retailer provides additional incentives. But automation does have a big part to play in all this. An overall pricing strategy that is implemented consistently by an automated process assures the retailer is presenting a consistent face to the consumer. Retailers have repeatedly seen their margins go up while at the same time improving their low price image by implementing more scientific pricing policies. Combining this with an aggressive online campaign that… Read more »
Gene Detroyer
Guest
11 years 10 months ago

Giant must be in big trouble if they see this “progress” as something to boast. We can all sit around the table and find many other reasons for the numbers to move like this that have little or nothing to do with a focus on prices. It may even suggest that if they have juggled their prices that led to an overall decrease in margin of 1% or more that price adjustments were detrimental.

Robert Craycraft
Guest
Robert Craycraft
11 years 10 months ago

The story hidden between the happy headline for Giant is that Safeway’s share increase was triple Giant’s and that was attributed to their lifestyle (i.e. upscaling) format.

That being said, I live in the market the writer is discussing, and I would agree that Giant’s impression for pricing has become much more competitive.

Craig Sundstrom
Guest
11 years 10 months ago

So if all the grocers (or whatever class of retailers you might choose) simply cut their prices, they’ll all gain market share??? That really would be a win for everyone, wouldn’t it?

Camille P. Schuster, PhD.
Guest
11 years 10 months ago

If Giant’s remodel and new prices are responses to consumer issues or concerns, they should expect an increase in sales. Should anyone else follow their lead and use the same approach? Only if their consumers have the same Isis and concerns. One size does not fit all.

Joel Warady
Guest
Joel Warady
11 years 10 months ago

You might be able to gain market share by lowering prices. But the minute the economy improves, people will abandon the chain that is seen as the low-price leader, and will seek out the chains that are promoting quality and innovation.

When competing on price, it is always important to remember that someone can always sell product cheaper, and then you start to compete to see who can cut their margins the most. Long-term, this can never be a great strategy for profitability or growth.

Mark Lilien
Guest
11 years 10 months ago

Market share means nothing if there’s no profit. A market share gain of 0.1% is meaningless unless you’ve been losing market share. The Giant story isn’t about retailing. It’s an IQ test.

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