Weis Price Freeze Creates a Buzz

By George
Anderson

Weis Markets’
recent announcement it was "freezing" prices on 2,400 items has
brought it national attention with MSNBC and other media outlets highlighting
the chain’s move at a time when consumers are struggling with the effects
of the recession.

David Hepfinger,
who will be adding the CEO title to his duties as president of Weis Markets,
said in press release, "While
our weekly promotions offer our customers an excellent way to save money
and reduce their costs, we wanted to go the extra mile by freezing and
lowering the prices on thousands of our staple items, both brand name and
store brand, over the long-term for 90 days."

The 155-store supermarket
chain plans to run the promotion through April 1.

Weis rival Giant Food
doesn’t plan on freezing its prices. Company spokesperson Tracy Pawelski
told The York Dispatch, "We’re going to keep doing what we
always do and that is maximize value for our customers every day."

Ms.
Pawelski added, "The proof is at the shelf, where we compare our everyday
prices with other grocers and show customers how much they can really save."

Discussion Questions:
How successful or unsuccessful will Weis Markets’ price freeze be in
helping the chain to bring in new shoppers and keep them?

BrainTrust

Discussion Questions

Poll

17 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
W. Frank Dell II, CMC
W. Frank Dell II, CMC
15 years ago

Weis Markets gets credit for trying solid communication with consumers. How successful they are will depend on the commodities market. My understanding is that there is a battle going on between buyers and sellers as to product cost. When prices were going up, most buyers did not put up much of a fuss. They knew they would have to pay more.

Now that commodity prices are declining, the buyers want lower prices, now. This is like what has happen to gasoline. Gas stations were quick to raise prices and are now slow to lower them. If commodity prices don’t drop quickly, the Weis will get away with it. If competition lowers prices below Weis, this may leave a bad taste for the consumer. All in all, this was a good idea.

Kai Clarke
Kai Clarke
15 years ago

I disagree with almost all of the comments being made here. With our economy in a recession and incredible downward pressure being placed on costs, freezing prices does nothing for the consumer but keep prices artificially high, during a period of deflation. Weis’s move to freeze prices would be akin to your local gas station declaring that they were going to freeze prices any time during the last 90 days.

With the impact of lowered oil and fuel costs yet to be realized in the market costs of almost all grocery staples will almost surely be faced with a price drop in the next 90 days. What good would freezing them at today’s prices do? Wheat, Rice and other staples saw all-time highs last year, and many are not far off from these. As the lowered costs of oil, labor and other variables start to impact the next harvest, we should see incredible price drops in all of these. Freezing prices will offer no advantage to the consumer, or Weis’s competitive position. Once this is realized, Weis will quickly abandon this with sharp “price cuts” just to remain competitive!

Tom Sattler
Tom Sattler
15 years ago

If Weis properly executes this price freeze, it could make a huge difference in bringing in new consumers and keeping them. That is to say, if they actually freeze the price of true staple items for the average consumer, this will work to increase their store volume long-term.

If instead, they freeze the price of “low velocity” items as a PR move (look, we froze the price of these products – which nobody buys anyway), then they will see a temporary increase in store traffic that will quickly return to their previous shopping habits if they don’t see the expected savings in their grocery bill.

Good idea – let’s see how they execute.

David Livingston
David Livingston
15 years ago

I agree with Max that it’s just a gimmick. Weis is a high-priced operator compared to Walmart and Aldi. So freezing prices that are already above market isn’t such a sacrifice. Also, it’s easy to simply pick out 2400 items where prices will not be going up anyway because they have already been locked in at wholesale. Hopefully for Weis, the average consumer doesn’t know this. All retailers will use various forms of this gimmick. Such as lowering 5000 prices (after you just raised them a month before in anticipation). Or the drug giveaways, except they are limited to various forms of the same antibiotic which have insignificant costs. And it simply is not worth the valuable time of pharmacies and insurance companies to deal with the paper work.

Gene Detroyer
Gene Detroyer
15 years ago

The consumer is smarter than ever and will be much more price conscience in this environment. With that in mind, any positive reaction from the good PR will be long gone in a matter of weeks.

So, Weis is freezing prices for 90-days? Does that mean they won’t use price as a promotion on those items for 90-days? And, if the manufactures don’t raise the prices on those items over the next 90-days, wouldn’t Weis’ prices remain the same anyway? How would you like to be the manufacturer that goes into the retailer over the next 90-days and tries to take a price increase?

And what is Weis going to do with the other 10,000 plus items in the store?

The reality is that almost any grocery retailer can make this claim. If a manufacturer were to give a price increase, the retailer would make a 90-day buy against the price increase anyway. In fact, it wouldn’t take much effort, in cooperation with manufacturers to freeze prices for six months or more.

Michael L. Howatt
Michael L. Howatt
15 years ago

Unless Weis’ movement starts a trend then I don’t see what effect they will have long term. I’m not sure if Weis is looked at as a trend-setter nationally. Now if Kroger decided to freeze prices–that would be a real story!

Max Goldberg
Max Goldberg
15 years ago

Freezing prices is a great gimmick and it should bring in some new customers. If those customers find that Weis offers lower prices than its competitors, has a product selection that meets their needs and has customer service that meets or exceeds their expectations, they will come back. If not, they will return to their normal shopping patterns.

Nikki Baird
Nikki Baird
15 years ago

I’m feeling pretty cynical about that move. Now that gas prices are falling precipitously, won’t that bring down food prices? I think this would have meant a lot more when oil was over $100/barrel, but now it sounds purely like a media ploy–and actually not that great of a deal. Freezing prices? When prices at a minimum ought to be falling anyway?

Phil Rubin
Phil Rubin
15 years ago

Nothing wrong at all with a move like this. It does send a very smart, relevant and customer-centric message. As simple as it sounds, being in sync with the “market”–the market being defined differently for each business but also broadly as everyone (how they are feeling and what they are buying) is still, sadly uncommon.

We are doing some planning work with a financial institution (a lender) and imploring them to focus on refinancing and the low interest rate environment. Again, simple and, as Doron mentioned, thinking like a merchant (i.e., about customers!).

Let’s hope there is more of this in 2009…it’s about time.

Susan Rider
Susan Rider
15 years ago

This should help bring in new business and stabilize current customers. The concept is good and to target the area where the consumer is hurting is a plus. The PR achieved on this move is also very beneficial.

Doron Levy
Doron Levy
15 years ago

Any gesture that a retailer makes to help the customer can only positively impact the business. Chains such as Giant that don’t follow suit may see some customer conversions to their competition. We don’t have to copy each other but the norm now is to make strides to help the customer. At the end of the day, we want the customer to know that we are on their side and we appreciate their business.

Having a merchant mentality is now crucial more than ever. It is also critical that all associates embrace the merchant mentality. We all know in retail that without the customer, we have no business. Want more customers? Show them that you care.

Tim Henderson
Tim Henderson
15 years ago

It’s a promo that’s likely to do exactly what it’s designed to do: get penny-pinching shoppers to give Weis a second look, at least for 90 days. That said, I still believe the recession economy is creating an even smarter shopper, i.e., one who is learning new ways to save at the POS. Those savvy skills mean consumers will shop Weis in the short term, but a price freeze alone will not stop them from perusing the aisles of competitors now or post-promo.

Price freezes are promos that, like most other promos, retailers should consider. But one of the factors merchants should also ponder is that price freezes are much like grocers’ frequent shopper cards in that they don’t generate loyalty, they only drive the short-term sale.

Warren Thayer
Warren Thayer
15 years ago

Nothing wrong with a good PR ploy, if it works. Weis has always been a good operator, in tune with its market. But you really can’t look at Weis’s situation as an example for something that can be replicated elsewhere. It’s an unusual market in terms of geography, barriers to entry and demographics.

Bill Bittner
Bill Bittner
15 years ago

There are a lot of interesting angles to the whole topic of prices right now. Given that energy and commodities are such a high portion of production costs and the consumer knows they have both had huge price declines, I believe the expectation is that prices should be going down. By announcing their move early and catching the headlines, Weis has merely taken advantage of the inevitable.

The interesting thing here is that both retailers and manufacturers are going to have to find another way of dealing with fluctuating costs. Last week, folks were talking about $30 a barrel oil (down from $140) now it is back up to $50 and no one knows for sure where it is going. I think the only thing that is certain is that input prices are going to be fluctuating for a while. This means manufacturers and retailers have to figure out how to meet consumer’s expectations without killing each other.

In general, business practices that used to encourage retailers to make early buy-ins or commit to future purchases need to be reviewed in light of the new uncertainty. Both sides have to figure out how they can mitigate the impact of large swings in input costs. In some sense, we are facing the same issue as the financial industry when they tried using auction swap securities as an alternative to short-term loans. Manufacturers and retailers must commit to product costs for future sales but when it reaches the consumer, they are expecting lower prices. No one is willing to purchase something today that they expect to get for less tomorrow. Welcome to the world of deflation.

Gene Hoffman
Gene Hoffman
15 years ago

Cutting prices and freezing prices are what many food chains when the sales momentum is modified. Such maneuvers do have some immediate impact. But how long can a food chain keep prices frozen when suppliers keep raising theirs? If Weis’s reputation is perceived to be built upon consistent, trustful processes, Weis will gain so new business. That would cause competition to react likewise and that could place their advantage back to near zero…and at frozen prices.

David Biernbaum
David Biernbaum
15 years ago

Across-the-board price freezes will kill not only the bad cholesterol but also the good cholesterol. There are a number of products in the store where pricing is not the answer.

Justin Time
Justin Time
15 years ago

Freezing prices is a great idea. Great A&P and its Super Fresh banner, which competes directly with Weis Markets, has been doing so for more than a year.

Recently it even introduced low Redtag shelf prices which are extended reductions, like Weis. This includes beating CVS pharmacy on HBA items by as much as 30 percent.

To retain loyal customers and attract new ones, temporary price reductions are a competitive tool that can be effective when properly executed.