Grocery stores cutting out the weekly specials

0 Comments | Deseret News (Salt Lake City), Aug 14, 2005 | by Janet Adamy The Wall Street Journal

The supermarket industry has been slow to fight back against discount stores, which began picking off supermarket customers about a decade ago. So far, most traditional grocers have focused on setting themselves apart from lower-cost competitors by adding better-quality perishables and stocking more natural foods. Until now, many grocers have said having better service and more convenient locations would be enough to fend off price competition.

For the past few years, the nation's largest supermarket chains have been posting meager sales gains and uneven profits as they lose shoppers to supercenters, club stores and dollar stores.

The pricing changes could have far-reaching effects on the grocery industry. Stores are driving a harder bargain with suppliers to offset the hit from the lower prices. Raley's eventually will reduce the pages of promotional advertising it buys in local newspapers, Coyne says.

Supermarkets say the changes are prompting customers to shop beyond deal items. "People aren't just cherry-picking as much as they used to," says Louis Stinebaugh, president and chief operating officer of Fresh Brands, operator of 87 Piggly Wiggly stores. He says the store is still offering most of its weekly specials.