Wegmans Cutting Prices

Discussion
Nov 07, 2008

By
George Anderson

The
general impression one gets of consumers who visit Wegmans is
that they are there for the shopping experience and less concerned about
price. While that view may have been somewhat true in the past, even Wegmans’ shoppers are facing some harsh financial realities
and are looking for deals. If Wegmans can’t provide
them then some other company will.

Now,
it appears that cash-challenged regulars at Wegmans can
put off looking for alternative supermarkets with the chain’s announcement
that it is cutting the prices on hundreds of items across its stores.

"These
are uncertain times," Danny Wegman, chief
executive officer, and Colleen Wegman, company
president, said in a joint statement. "We know our employees and customers
are very concerned, and so are we. During difficult times like these, it’s
okay with us if we make a little less money."

Wegmans believes it can cut retails now
as it expects to see lower prices from suppliers in the months ahead. A
company release pointed to lower fuel and grain costs as the reason the
chain is looking for vendors to decrease their prices in the near future.

Jo Natale,
a spokesperson for Wegmans, said the chain’s
price reductions would mean monthly savings between $40 and $60 for the
average family shopping at the chain’s stores.

Wegmans is
putting added emphasis on lowering the prices of its private label line.
"We can be more aggressive with reductions because we have better access
to detailed information on the factors that determine costs for those items,"
Ms. Natale said.  "These products are already
the best value in their respective category, and customers are choosing them
more often as a way to save money."

Discussion Questions:
What will Wegmans’ price cut mean for it and its competitors? Has the
economic downturn exposed Wegmans’ Achilles’
heel?

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7 Comments on "Wegmans Cutting Prices"


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Marc Dietz
Guest
Marc Dietz
13 years 6 months ago

Regardless of how much margin Wegmans invests in these price cuts or how well they maintain share vs. other stores or channels, this is an example of great retail marketing. Understanding the customers and their needs, of course, but also the combination of pricing strategy and execution/communications. While a price cut from $2.39 to $1.99 is fairly noticeable (both based on percentage change and leading digit), not all are as obvious to the customer.

Communicating the new value and lower prices is critical. A press release that local papers might pick up, along with the quote from Danny, sends a message to their customers that then is reinforced with in-store signage, etc (and have you seen the home page of their website lately?).

Many of our customers use price optimization to lower prices and to do so by investing fewer margin dollars…and a critical success factor in those initiatives is coupling the price changes with the kind of execution Wegmans is demonstrating.

Domenick Celentano
Guest
Domenick Celentano
13 years 6 months ago

Wegmans is a family-run business. Family businesses do not have “quarter-itis” and can take a longer view on strategy. They really look at time frames of a generation.

Wegmans provides a fun shopping environment with what is termed “purposeful theater.” They recognize that people shop there for their uniqueness but they are smart enough to recognize that is far better to reduce prices to keep those customers coming.

The economy will eventually turn around…certainly in a far shorter time than one generation.

Just a different perspective from a family business expert!

David Livingston
Guest
13 years 6 months ago

This is old news. Wegmans came out a couple of years ago with a short infomercial on their price cuts. It’s available on and it was posted in August of 2007. I don’t think it’s exposing a weakness but rather it’s revealing another one of Wegmans’ strengths.

Ryan Mathews
Guest
13 years 6 months ago

Remaining sensitive to your customers is never a weakness. If Achilles had heels like Wegman’s Troy would have fallen a lot faster.

Warren Thayer
Guest
13 years 6 months ago

These are truly different and difficult times, so if it’s absolutely necessary, Wegmans has to do what it has to do. But it is such a wonderful, unique retailer. My only fear is that cutting prices could mean Wegmans will have less money to provide the service that has done so much to provide it with differentiation. From there, it’s a slippery slope.

Camille P. Schuster, Ph.D.
Guest
13 years 6 months ago

Demonstrating sensitivity to consumers’ circumstances is a good thing.

Janet Poore
Guest
Janet Poore
13 years 6 months ago

I’ve always found Wegmans to be lower in price overall on groceries, having compared their prices against Genuardi or Giant. They keep prices low instead of having sales. The items I find expensive are the ready-to-eat from the cafe area. If they cut prices even more, it’s worth the longer drive.

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