L.A. supermarket chains slash prices to lure shoppers

08/19/2009 03:15:30 PM
Tom Burfield

Recession has spurred new grocery buying patterns for Southern California consumers, said Dick Spezzano, president of Spezzano Consulting Services, Monrovia, Calif.

As a result, some of Southern California’s biggest supermarket chains are vying to see who can do the best job of slashing prices and helping consumers cope with the economic downturn.

The situation is especially dire in Los Angeles County, which reported an unemployment rate of 11.4% in mid-July.

“People have more time because they are unemployed or less money, and they have a tendency to shop more stores,” Spezzano said.

They also pay more attention to the ads and may be willing to drive a few extra miles to take advantage of low prices, which may be found at club stores or at one of the increasing numbers of independent chains rather than traditional retailers, he said.

“The conventional stores have to react to that,” Spezzano said.

The Albertsons division of Minneapolis-based Supervalu remodeled 38 stores in the Southern California region (which includes Las Vegas) during the 2009 fiscal year, said Susie Bell, Supervalu’s corporate public affairs manager. The chain, which also owns the 16 Bristol Farms stores, plans to revamp 34 more stores this year.

“In the past few months, we have initiated several programs aimed at saving our customers money and offering them great value,” Bell said.

For example, Albertsons launched a program called the Big Relief Price Cut that will reduce prices by up to 20% on thousands of items across the store, she said. The company also offers other programs, such as three-day produce sales and store brands that offer savings of up to 20%.

In June, San Bernardino, Calif.-based Stater Bros. announced that it was reducing prices on more than 10,000 items in all of its 166 locations.

The company launched a advertising campaign June 17 to inform the public about the price-reduction program, which has the theme “Lowering Prices Every Day … to Help You Save on What You Pay.”

The campaign is featured in the chain’s weekly circulars, in TV and radio ads, and it is communicated throughout the stores.

Stater Bros. moved into its new San Bernardino headquarters about a year ago, where it opened a perishables warehouse in September.

Compton, Calif.-based Ralphs Grocery Co. announced a new, low-price policy in June 2008, along with an improved loyalty card program.

The chain’s parent company, Cincinnati-based The Kroger Co., reported same-store sales growth of 5% in the latest fiscal year compared with less than 1% for Safeway Inc. and a 1.2% decline for Supervalu Inc., the Los Angeles Times reported.

In a Times interview, David Dillon, Kroger’s chief executive officer, attributed much of the company’s success to a tracking system that indicates how often shoppers visit the store and provides information about what they buy.

Kroger also benefits from a successful private-label program that reportedly is a $12.5-billion annual business for the company.

At Pleasanton, Calif.-based Safeway Inc., parent company of Vons, Steve Burd, chairman, president and chief executive officer, reportedly said in a conference call to investors that the company plans to emphasize everyday low prices designed to induce loyalty among shoppers rather than focusing on promotional prices to boost foot traffic.

Tesco’s El Segundo, Calif.-based Fresh & Easy Neighborhood Market continues in expansion mode. The chain opened its 121st store — its 65th in California — in Pasadena, Calif., this summer and announced plans to open four other stores in California by Aug. 19.

The chain halted its expansion for several months more than a year ago, tweaked its store format and started distributing circulars in areas where it has stores.

The firm announced in a news release this summer that it planned to bring more than 1,000 new products to existing stores, including more Fresh & Easy-brand products, larger pack sizes and more national brands, “as well as exclusive new lines of national brand-quality products at unbelievably low prices.”



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