Supermarket scene heats up in Los Angeles

07/16/2012 01:20:00 PM
Tom Burfield

Cutbacks — in prices, labor and even the size of stores — are in evidence throughout the Los Angeles area retail scene this summer.

Compton, Calif.-based Ralphs Grocery Co., a division of Cincinnati-based The Kroger Co., launched a program in early April to significantly reduce prices on thousands of items by up to 20%, said Dick Spezzano, president of Spezzano Consulting Service, Monrovia, Calif.

The reductions affected hundreds of produce items, including the salad cases.

Nearly all the packaged salads — national brands and the chain’s own Private Selection brand — were reduced from prices like $3.49 down to $2.99, he said.

Selected items, such as roma tomatoes and several varieties of apples, were reduced to a price such as 99 cents per pound for an entire season, he said.

Large signs advertise the low prices.

Spezzano said other chains have begun to replicate Ralph’s prices in nearby stores.

“You can’t ignore Ralphs with 260 or 270 stores in the marketplace,” he said.

Vons, a division of Pleasanton, Calif.-based Safeway Inc., launched a program called Just for U, which the company describes as “the first online and mobile shopping tool of its kind.”

The program delivers targeted savings directly to a shopper’s Von’s Club Card. Customers can sign up free online or by accessing Just for U through a mobile application for iPhones or Androids.

Spezzano said the program seeks out best buys from vendors for items individual shoppers buy most.

“It’s been very effective,” he said.

Meanwhile, in early June, Albertsons’ Fullerton-based Southern California Division, a subsidiary of Minneapolis-based Supervalu Inc., announced plans to reduce its store-level work force by up to 2,500 positions across all 247 Albertsons stores in California and Nevada by July 1.

The company said it is focused on simplifying its organization “and reducing expenses to help reinvest in more customer facing initiatives.”

“A decision of this nature is never easy, but it is the necessary step for us to take to help improve our business and accelerate our turnaround,” Dan Sanders, president of Albertsons’ Southern California division, said in a news release.

The cuts should help the company compete more effectively in a rapidly changing marketplace, he said.

A cutback of 2,500 store-level employees works out to about 10 workers per store, Spezzano said.

“That’s a lot,” he said.

El Segundo, Calif.-based Fresh & Easy Neighborhood Market, which launched in Southern California in late 2007, reportedly has closed about a dozen standard-size stores but has opened nine 3,000-square-foot express stores in Los Angeles and Orange counties.

The company now has 199 stores in California, Nevada and Arizona, including the nine express stores.

Spezzano said the stores make efficient use of space and are patterned after those in Europe, where real estate is at a premium.

Meanwhile, the company continues to tweak its format.

Fresh & Easy has added up to 4,000 brand-name grocery items to improve variety and has added hot bakeries in its back rooms, Spezzano said.

Produce also has undergone some changes.

When the stores originally opened, just about every produce item was packaged. Exceptions were melons, pineapple and bananas.

Now, about 20 items are sold by the piece, including apples, lemons, avocados, limes and papayas.

“That’s a big change for them,” Spezzano said.

Greensboro, N.C.-based The Fresh Market may be the next supermarket chain to venture into California, Spezzano said.

He said the chain might open 150 stores in Southern California.

Meanwhile, ethnic supermarkets, which increasingly are buying directly from grower-shippers, continue to grow in Southern California, offering low prices, low margins and high volume, Spezzano said.



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