Grocers: The Price is Right in Center Store
By George Anderson
The Wall Street Journal reports that a number of supermarket operators, including Raley’s, Giant Eagle, Fresh Brands and Wegman’s, have cut the number and frequency of promotions of center store items and, instead, lowered regular prices on popular products to compete day-in and day-out with discount rivals, from Costco to Wal-Mart.
According to the report, supermarkets aren’t looking to compete on price on every item in the store but are targeting products in categories, from ready-to-eat cereal to toothpaste, where consumers show a willingness to go outside traditional grocery to make purchases.
Willard Bishop Consulting estimates that shoppers can save an average of five to seven percent on shopping trips as a result of this pricing strategy shift on the part of some grocers. Some families could save a few hundred dollars a year as a result.
Bill Coyne, president and chief executive of Raley’s, said that customers at his chain were getting tired of having to shop at multiple outlets to find the lowest price and many complained that “deals” had them stocking up on products that ultimately were never used.
Louis Stinebaugh, president and chief operating officer of Fresh Brands, said lowering everyday prices on popular goods plays to the consumer’s desire to make their lives less complicated.
“People aren’t just cherry-picking as much as they used to,” he said.
Moderator’s Comment: Is an EDLP approach to popular center store items reducing the amount of cherry picking done by consumers? What are you seeing in
terms of grocery store operators altering promotional activity and pricing strategies to compete with discounters? What grocers have been most/least successful taking this approach?
George Anderson – Moderator