Meijer Rolls Back, Err, Drops Prices
Memo to Wal-Mart. Roll this back. Meijer’s “Price Drop” has arrived.
The Grand Rapids, Michigan-based supercenter operator announced it was lowering prices and, beginning this Sunday, the company’s 175 stores will begin offering unadvertised price reductions on items on a daily basis.
The move comes as the retailer seeks to fend off increased competition from Wal-Mart’s Supercenters, although the defensive strategy is not publicly acknowledged by Meijer.
According to a company release, each Meijer store will have “hundreds of blue ‘Price Drop’ banners, shelf tags and floor graphics” to show customers where they can find the best deals. Meijer will also make use of outdoor billboards and cart signs as way of introducing consumers to its “Look For The Blue” program.
Roughly 5,000 items are expected to be part of the “Price Drop” program on any given day and Meijer plans to add new items from categories across the store every week.
“This program is clearly customer-centered as it underscores our promise to keep prices as low as possible and to provide an easy shopping experience for our customers,” said Stacie Behler, vice president of corporate communications and public affairs at Meijer. “In addition, our customers will benefit from being able to find great discounts on many of their favorite items whenever they shop.”
Ms. Behler said the program helps to reestablish Meijer’s reputation for offering low prices and real value on the products it sells. “It’s critical that our customers know that offering them the lowest price possible is the foundation of our business. This program is tangible evidence of our continued commitment to competing aggressively for their continued loyalty,” she said.
Discussion Question: Is Meijer’s “Price Drop” the answer to dealing more effectively with the competition coming from Wal-Mart?
Neither “unadvertised” nor “unspecified” are the correct terms… “unsuccessful” is: like everyone else – outside of Meijer HQ – I don’t see much merit in this concept; perhaps they should one-up their idea and hide prizes in some of their merchandise…it worked for Willy Wonka.
Unfortunately, In order to attract customers, Meijer needs to stop chasing Wal-Mart and trying to do everything Wal-Mart does. Meijer was a very fine company in the 1990’s, when they were testing revolutionary prototypes, merchandising selections and entering new markets.
What Meijer really needs to do is focus on where they were in the 1990’s. Meijer was building very high quality stores that offered great pricing with an upscale twist of design in their stores. Currently the Meijer stores are nothing more than a White Vanilla Box. No offense to the Rockwell Group, but I think Meijer’s former in house designer Pat Missad did a wonderful job of design at Meijer during the late 1980’s and 1990’s.
Around 2001, Meijer started focusing on downgrading the look of their stores, which in turn has hurt their image. Meijer also cut customer service. Customer Service was one of the huge reasons customers came to Meijer in the 1990’s. They had plenty of checkstands open, a lot of available staff on the sales floor and clean organized stores. From what I have seen of Meijer’s here in Chicagoland and Indianapolis, the Meijer stores has been slowly “upgraded,” but these upgrades are actually downgrading the elegance in the stores. Case in point: the Aurora, IL store on Route 59. The store was Meijer’s 2000 Prototype, which utilized bright HID lighting, clean simple “village” graphics, cleanly decorated walls, a central market that had bright lighting that made the produce and bakery area look incredible, much like Safeway’s Lifestyle format. The store has recently been remodeled and the HID lighting has been replaced with cheap fluorescent utility room lights, the walls have been sloppied up with overdone blue banding and picture graphics, the market area has been brightened and seems more like Wal-Mart and finally there is plans to move the deli against the wall instead of the distinct island it is currently in. All of these moves are making Meijer look cheap and boring and there is no reason to go to a Meijer over Wal-Mart.
One other tacky move is that Meijer moved the tobacco away from the service desk and onto the sales floor near the registers. Not only does it look sloppy, it is copying almost exactly what Wal-Mart does.
I also forgot to mention, Meijer customers are no longer referred to as Guests. Somewhere along the line when Meijer started doing in store announcements, the lady says “Attention Meijer Customers.” I can remember when Meijer went out of their way to say Meijer “Guests.”
Might I also mention, they hired a president of a University and family friend to run the company? He has no retail experience!
Meijer needs to go back to the 1990’s and evaluate what they did right then. Improve lighting styles, add a branded restaurant to replace their almost defunct food courts, improve product selection, refer to customers as guests again and most of all, MEIJER NEEDS TO STOP CHASING WAL-MART…. Wal-Mart essentially copied everything Meijer invented…so the tables need to turn again to make Meijer profitable.
Given that Meijer’s costs are presumably higher than Wal-Mart’s (a retailer that is 25 times larger), it seems that Meijer would have to cut too far into their margins to drop prices on enough items on an ongoing basis to save consumers money (or make consumers believe they are saving money) vs. Wal-Mart’s everyday low prices.
Hopefully they are giving their customers good reasons other than price to shop at Meijer.
What would happen if Meijer used electronic shelf labeling to show the Wal-Mart price and Meijer’s price for every item? The electronic shelf labels could be updated once or twice a week and they’d prove the advantage/disadvantage of shopping at Meijer and Wal-Mart. In the late 1980’s, Grand Union’s southern division (I forgot the brand name) had stores fighting Food Lion, which was then the local low price leader. Grand Union sent people with pocket-size dictating machines into Food Lion stores every week recording the price of every item. Grand Union then copied Food Lion’s prices. The result? The stores became (modestly) profitable for the first time in years.
I don’t think so. Wal-Mart has won the pricing game; it owns the brand called price. Meijer (or anyone) has to beat WM at something else….
Pricing is just one problem Meijer is having and it will certainly help. However, I don’t think Meijer will ever be able to get to Wal-Mart’s pricing level and the consumer will not be fooled for long.
For many years Meijer was known for having strong perishables – meat, produce, salad bars, etc. In recent years, Meijer has dummied down their operation to appear to look more like Wal-Mart. They have replaced butchers with centralized meat cutting and pre-packed meat. Career grocery clerks have been replaced with immigrants and elderly part-timers. Salad bars have been removed from the stores. The cutbacks in labor have lead to dirty store conditions. Friendly cashiers have been replaced by self-service checkouts.
I doubt Meijer will ever effectively compete with Wal-Mart. Instead of focusing more on what they were good at they tried too hard to mimic Wal-Mart. My advice to Meijer would be to stop trying to be a copy cat of Wal-Mart. Instead, upgrade your perishables and customer service. Where did all of those good Meijer employees go? It’s hard not to run into one working in a Texas SuperTarget.
“Unadvertised” is not the correct term. “Unspecified” is. Clearly Meijer is hoping that the “treasure hunting” mentality will induce an increase in traffic. There will probably be a relatively small increase initially as customers without location conviction attempt to garner deals.
When will retail learn that price is not the only determinant of shopping preference? Limited shopping of Meijer stores has led me to believe that challenges exist in customer service, store appearance, store cleanliness, execution of merchandising programs, and in-stock status on relatively fast moving items. If these aspects of the experience have not been addressed, even if the tactic works in generating an increase in traffic, the increase will be only temporary.
At the very least, credit does go to Meijer for accurately determining that they must do something to increase the number of footsteps in their stores. However, unadvertised specials have never really worked as reliable and sustainable volume vehicles. Generally, they result in unanticipated savings to customers who would have bought the item anyway. Or, they result in brand or version switching at the commodity level. Rarely do they result in larger market baskets. Meijer must know this. I know others will point this out, but even down to the color, this is reminiscent of Kmart’s Blue Light Specials, without the sense of urgency and excitement.
When the father of supercenters, Meijer, elects to resort to a “Price Drop” program to deal with the on-coming Wal-Mart Supercenters you know they have some troubles that probably supercede just pricing comparatively against the big W-M.
To compete with the “Great Price Army,” Meijer will need to go back to its former excellence: great assortments, skilled and alert employees, freshness, new ideas and dynamic stores with a high sense of theater.
Every retailer needs to shape their competitive response based on both their own strategy and the strategy of the competition. According to Sun Tzu, the ancient Chinese military strategist, the approach is to, “First eliminate your own vulnerabilities, then attack the vulnerabilities of your enemy.”
The “Price Drop” sounds like a solid step for Meijer’s in reducing their vulnerability to Wal-Mart on price, i.e., it’s a necessary and probably first step in continuing to formulate their overall response.
Again, referencing Sun Tzu, the next thing they need to do is to find ways to exploit Wal-Mart’s vulnerabilities. It seems to me that they’re in a good position to do this based on the strong appeal of some of their perishables departments, particularly meat and produce, as well as their tradition of delivering a strong, positive shopping experience.
Dropping prices is not the answer to competition. When prices are very low, the consumer wins in the short term, but loses in the long term. The lowering of prices must come at the expense of something else. Wal-Mart has, supposedly, the lowest price; but they have poor service. All in all, the customer experiecne is not very high. Thus, there is low customer loyalty. Does Meijer really want to fight in that arena? The strategy of unadvertised price reductions is probably being used to lure shoppers into the store in order to find out what has been reduced. I for one would probably not go to one of their stores just to find out what was on special. I’d rather look at a circular and then if I see something I like, I will go to the store.
To lower prices to a point where you can’t be the lowest price in the market surely isn’t the answer.
It’s interesting to note the differences in the comments so far versus the survey on the significance. They would seem directly opposing one another.
Meijer had the competition beat at a point in the past on nearly every point of differentiation that could be thought of in retailing. Today, they have moved away from nearly every one of them in favor of Wal-Martizing their stores.
There’s a lot at stake for Meijer. I hope they haven’t put a stake in the ground on price, at their peril.
As one of the only true superstore type competitors to Wal-Mart in the country, they have a great opportunity to set themselves apart as a real alternative to a specific market, much in the same way that Target has done. What would appear to be the case is that they have chosen to stand along side WM and go head to head. In the end, what does that leave as a choice for the consumer?
Meijer is cutting profits by dropping prices. I concur with other statements that Meijer needs to pick another benefit to customers other than low prices. Besides, has anyone really had outstanding customer service consistently at Wal-Mart? Less than 20% of buyers are price sensitive so why slash prices AND guarantee lower profits? Pricing cuts are disabling and Meijer’s marketing team is using a crutch instead of insisting that Meijer’s management needs to kick up the overall game.