Price competition is heating up in the grocery channel. The rationale, RetailWire has been told, is that while most supermarkets expect to lose some share to Wal-Mart Stores and other discounters, they want to try and grab as much of the market away from other grocery chains and independents as possible.
Delhaize, which operates Food Lion, Hannford and Sweetbay, recently said it was looking for competition to intensify as rivals including Ahold, Safeway and Supervalu trimmed prices across the store, according to a Dow Jones Newswire report.
A vice president of a regional grocery chain who asked not to be identified told RetailWire, "The real battle is being waged in everyday prices. Consumers know that there are going to be deals on some hot items every week and they go from one store to another cherry-picking those deals. Where the battle is going to be won or lost is how much non-promoted product they will buy. To achieve that, you need to lower your everyday retails on the national brands and promote the heck out of your store brands."
Safeway's Eastern Division announced yesterday that it was dropping prices as much as 25 percent on thousands of items in its stores. The chain will identify the products with lower prices with yellow tags on the shelf.
"In this tough economy, as we gathered consumer insight, people are telling us they're looking for more value in their shopping experience," Steve Neibergall, Safeway Eastern Division president, told The Baltimore Sun. "They're trying to stretch their dollars further."
Back in June, price cuts at Ahold's Giant Food division were given credit along with store remodels as being behind the chain achieving its first share gain in the Baltimore market in six years.
Discussion Questions: Will price competition increase in the grocery channel in the months/year ahead? Can supermarkets engage in a lower everyday price initiative while simultaneously protecting margins?