July 20, 2005

Old and Busted: Discounts
New Hotness: Always Low Prices

In the WSJ (free link), Janet Adamy writes that grocery stores have recently begun adapting their price strategies to compete with the discounters gobbling up their market share:

In recent months, several regional grocery chains have reduced prices on everything from Kraft macaroni & cheese to Ragu pasta sauce in an effort to lure back shoppers who have defected to discount grocers. In most cases, the stores also stopped offering weekly bargains on items like cereal or yogurt.

For decades, most traditional supermarkets have lured price-conscious shoppers with cheap weekly specials and made up the lost profit by keeping nonsale prices substantially higher....

This doesn't mean supermarkets aim to compete with Wal-Mart on every item; in most stores, the cuts apply to no more than 15% of their items -- typically so-called center-of-the-store goods, like toothpaste and toilet paper

I haven't noticed this in my area, where Giant and Safeway still have big reductions, and Shoppers has never had many of them to begin with.

There is a pool asking where you shop, which also permits comments, like this one:

WalMart since I can use all the competitor ads and get a matching price. That way I get the benefit of various store specials without the time and gasoline costs. That being said, we also shop traditional stores for specialized products or in cases that WalMart produce is inferior.

UPDATE: I should have suspected that Russ Roberts would have something smart to say about this:

Everyday low prices is part of the reason Wal-Mart has crushed lots of chains that were "sales-driven" having booms and busts in sales and having to cope with the customer service challenge that Mr. Dillard discussed.

Posted by Kevin on July, 20 2005 at 10:40 AM