Sweetbay Launches Store Brand Price War

Discussion
Mar 09, 2011
George Anderson

Sweetbay wants consumers in Florida to know that when it comes
to saving on store brands, its prices are lower than Aldi, Publix, Walmart
and any other grocery chain that comes to mind.

The Delhaize chain is launching
its new "My Essentials" store brand
and, with that, it has promised to undersell any comparable store brand in
the market, according to a Tampa Tribune report. Sweetbay is beginning
its rollout this week with plans to have the more than 500 items in the line
available in its 105 stores by June.

Sweetbay is also promoting the nutritional quality
of its line with products free of trans-fats and containing lower salt and
sugar levels. The chain is confident that consumers will also be happy with
the taste profile of the new items and is offering a double-money-back guarantee
if shoppers are unhappy.

The latest move by Sweetbay follows an initiative last
July to demonstrate that the chain’s prices were lower than rivals Publix and
Winn-Dixie. Sweetbay claimed to have 700 products offered for a lower
everyday price.

At
the time, Sweetbay’s vice president of merchandising Geoff Waldau, told the Tribune, "BOGO
deals [offered by Publix] may cost less every once in a while, but we’re saying
that if customers shop with us over time, they’ll save week-in, week-out on
the things they actually want to buy."

Sweetbay’s price positioning comes
at a time when inflation has been driving up the cost of goods for consumers.
Federal estimates expect food prices to go up between three and four percent
this year. Individual categories could experience much bigger spikes.

Discussion Questions: What do you think of Sweetbay’s price image approach? Will it be effective in capturing shoppers who are currently going to competitors’ stores?

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13 Comments on "Sweetbay Launches Store Brand Price War"


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Doug Stephens
Guest
Doug Stephens
10 years 2 months ago

Price is a really tough position to dominate in and furthermore, it’s a race to the bottom. I’d rather be Whole Foods on a bad day than the guy trying to defend the low price position.

Warren Thayer
Guest
10 years 2 months ago

Doug has it exactly right. I’m fine with the other strategies outlined by Sweetbay, but going for lowest price is rarely ever a good idea over the long haul. And if they think that being cheaper than Publix on private label is going to win over the Publix customer, they’ve been taking Charlie Sheen’s pills.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
10 years 2 months ago
Although Sweetbay may gain some attention and even store traffic for their efforts around the new “My Essentials” program, I am not convinced this will be a win long term for Sweetbay or frankly their shoppers. If you are selling for less than Walmart, a consumer has to start questioning the quality of what they are buying. Walmart owns the “Low price” game (even if it is not true in every case) with few formidable competitors like H-E-B in certain regional markets. Sweetbay may be better served offering their consumers a better in store experience and high quality store brands at a fair price. Trader Joe’s, local grocer Stew Leonard’s, and Wegman’s have all been very successful using this model. None of these stores lead with price. They all lead with store brand quality, freshness, in store experience and finally competitive pricing (on some categories). When you by milk at Stew Leonard’s, you know it is the best. Prices are easy to drop, but extremely hard to raise. Over time, this type of strategy threatens… Read more »
David Livingston
Guest
10 years 2 months ago
My first question, is Sweetbay really lower priced than Aldi? Or even Walmart? Personally I find that hard to believe. It’s fine to go out and say that but are consumers really going to believe it? Perhaps on few items, but not on 700. Our research shows Sweetbay is lower priced than Winn-Dixie and Publix. Big deal; that doesn’t take much effort. What really counts is sales per square foot and market share. Sweetbay isn’t even close in any of those categories. Sweetbay has tried different approaches and I don’t see them making any headway against Walmart and Publix. Even if they are truly as low priced as they claim, the consumer isn’t buying the message. They haven’t in the past. I doubt they will now. Making claims of being lower priced that Walmart and Aldi could be dangerous and have serious consequences. No one else has been able to beat them. So we are suppose to believe that a distant also-ran in Florida like Sweetbay is somehow magically going to be able to be… Read more »
Paula Rosenblum
Guest
10 years 2 months ago

I hate price wars. It’s useless for everyone–and trains the consumer very badly. And the biggest guy wins. Guess what: that’s not Sweetbay!

I’m frankly surprised Sweetbay has resorted to this tactic. Its sister company Hannaford always competed on service (at least as far as I can remember).

And “double your money back if you’re not satisfied” is a very lame alternative to “buy a national brand, get a house brand free.” The former requires you to make a second trip, where you will likely spend as much on gas as you “saved” on the item and remember to bring your receipt and/or open box of who-knows-what. The latter gives you the opportunity to make the comparison straight-up, right in your kitchen.

This is just wrong.

Roger Saunders
Guest
10 years 2 months ago
With a home in Florida, the ‘Blonde Bombshell’ (wife of 37 wonderful years), and I shop Sweetbay. They do have lower/competitive prices compared to Aldi, Walmart, Winn-Dixie, and certainly Publix, based on my ‘Horseback Surveys’. However, based on the Consumer Intentions & Actions (CIA) database, Sweetbay is facing an uphill battle should they try to fight this one out on price alone. Consumers in Florida, and around the country tend to have strong loyalties to their grocery stores. Each of these competitors have ‘Net Promoter Scores’ of 40+, with Walmart showing up at 30+ for Groceries. Better for Sweetbay to look to why consumers make a switch of grocers. Leading the list are quality, location, customer service, and then price. Sweetbay needs to get customers to cross-shop the store more regularly–they rank lower with their customer in buying their meat and produce there MOST often, based on the CIA. That leads to smaller ticket at the checkout. Good looking stores, solid service, good quality–sell those values first, and let the consumer know that price is… Read more »
Susan Rider
Guest
Susan Rider
10 years 2 months ago

Certainly, it will help create them as a one-stop store. They already have captured market share in a very crowded market and have done quite well. Price and quality will get them the business.

Lee Peterson
Guest
10 years 2 months ago

I think what’s often overlooked is that price is one of the key “P”s of a brand. So, as is the case for the execution of any brand’s tenants, price would have to be there from the core out. From the beginning, you’d have to say, “this brand is about low prices.” Then you execute that at every level: place, people, projection (graphics/ads/tone of voice), etc.

From the first time you ever walked into an Aldi to now, you get that message. They mean it. However, that’s not been the case with Sweetbay. Are they about price? Quality? Convenience? Fresh? Hard to say.

So, from my p.o.v., it’s going to take a little more than a private label and a bunch of signs to shift the perception of price with that brand. Then, as pointed out above, can they afford to continue that? We’ll see.

Craig Sundstrom
Guest
10 years 2 months ago

“They’ll save week-in, week-out ON THE THINGS THEY ACTUALLY WANT TO BUY!” (emphasis added)

I think there’s room for a lot of mischief in that qualification. Like pretty much everyone else here, I think the effort is lacking. We seem to have Store A claiming they’re less than B, B < C, and C < A…they can't all be true (at least not in any meaningful way).

Janet Dorenkott
Guest
Janet Dorenkott
10 years 2 months ago

Sweetbay may eventually experience an image problem. Do they want to be seen as the low-cost provider and compete with Walmart or are they trying to provide the highest quality products and compete with Trader Joe’s and Whole Foods?

I agree that it’s hard to believe a small chain can compete with prices against Walmart. If their quality is that of a Trader Joe’s, then why not compete with their real competition and say their prices are less than Trader Joe’s? I’d leave Walmart out of it since many people will have a hard time believing Sweetbay has the ability to compete effectively and long-term on price.

Herb Sorensen
Guest
10 years 2 months ago
The perception of price is more important than the actual price. Obviously there is a potential for backfiring, but claims like the ones discussed here are more useful for the presently “loyal” Sweetbay customer, than trying to get others to switch. Personally, I think it is a great strategy for that reason. If you limit the target this way, I don’t see it as terribly difficult to achieve their claims. Having done that, the loyal Sweetbay customer will gladly buy lots of high margin stuff, not on the discount list. Remember, when it comes to price, it is 90% perception, and it is the habitual shopper where the money is made. Switchers are of little consequence, compared to migraters. Migrating is more likely to happen because your friends LOVE that store, than because of the price perception. Once migrated, the awareness that LOW prices are available, will keep them there, even if they don’t buy those low prices. On the fluidity of the market, and the real absence of “loyalty,” I recommend, Byron Sharp’s, “How… Read more »
M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
10 years 2 months ago

That’s going to be an impossible job, monitoring the prices of 500 items in several other chains and then underselling them. (“Undersell” is a really poor word choice here. It means “sell less than” rather than the intended “sell FOR less than.”) And how about this one?: “they’ll save week-in, week-out on the things they actually want to buy.” As opposed to the things they actually (overused word) DON’T want to buy? What does that mean? And “Double-money-back guarantee?” Also impossible to manage.

I applaud Sweetbay’s moxie, but this seems not to be well thought out. Competitors, for instance, have to monitor prices on the 500 items in only one store, Sweetbay, in order to find instances where they have the pricing advantage. Then, they can hammer Sweetbay in ads. With three or four competitors doing the same thing, Sweetbay is going to take a beating.

William White
Guest
William White
10 years 2 months ago
Sweetbay is going down a no-win path here. They have forgotten the value proposition. They seem to be floating in “no man’s land,” not knowing what they want to be when they grow up. In order to survive in this business, especially against the behemoths of Walmart and Publix, you need to find your niche, and it can’t be price. In my opinion, they need to focus on quality of perishables, and the whole value proposition, the perception that they are a value in center store, but blow away the competition in he perimeter departments. On price, it is all about perception anyway. If they can’t pull that off (which is certainly very hard to do, will take some time to “walk the walk,” and is maybe even harder for them given their ownership’s bent towards price, not quality), they won’t make it long-term. They need to more closely follow their brother Hannaford than the Food Lion mantra. What are they thinking? Could this be Food Lion’s last ditch effort to turn Sweetbay around before… Read more »
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