Grocers hype bargains to thrifty public

Scramble for customers' shrinking dollar is behind increased promotions, shopping advice

August 24, 2008|By Andrea K. Walker | Andrea K. Walker,

Molly Kushner leads a group of people through the aisles of Whole Foods Market in Mount Washington, trying to persuade them that they can shop frugally at the popular - but often pricey - natural foods store.

She stops at rows of locally grown yellow squash, ears of corn and eggplant. Local food is cheaper because it travels a shorter distance to the store, she tells the group, part of the "Shopping on a Shoe String" classes the grocer recently launched.

After pointing out the company's private label products as inexpensive options, she bypasses the case of fresh salmon and red snapper, pausing at a frozen food display with less expensive tuna and scallops.

"Don't neglect this part of the fish department if you're on a budget," says Kushner, a Whole Foods marketing specialist and community liaison.

Higher food prices and the slowing economy are forcing consumers to stretch their grocery dollars - heightening competition among supermarkets and leading even chic spots such as Whole Foods to trumpet their bargains. Grocers report that shoppers are using more coupons, buying less expensive cuts of meat and increasingly seeking out store brands as they try to lower their food bills.

Meanwhile, supermarkets are offering discounts for repeat customers, triple-coupon promotions and free milk to attract consumers who have seen food and beverage prices spike 5.8 percent from a year ago.

Although the intensely competitive supermarket industry has long offered weekly discounts, analysts expect the promotions to escalate as stores work to build customer loyalty even as they're forced to raise prices.

"The question consumers are asking is who is going to give me a way to moderate my food costs," said Harry Belzer, a vice president at consumer research firm NPD Group. "I think we're going to see a whole bunch of promotions that we haven't seen before."

Josette Sykes, 57, began noticing the higher prices about a year ago. These days, she buys fewer items, including eggs and bread, and chooses smaller containers for products such as dishwashing liquid. The retired corrections officer from Baltimore, who has noticed more grocers competing for her dollars lately, also scours the newspaper for discounts and uses more coupons than ever. "I clip my heart out," Sykes said while piling groceries from Safeway into her minivan. "I stretch every cent I can."

Although they can't stop the rising prices, consumers are finding other ways to cut food costs.

Nearly half of shoppers say they are buying less than a year ago because of the slowing economy, according to a May survey by the Washington trade group Food Marketing Institute. About 40 percent say they are looking for grocery specials in newspapers and circulars. Coupon use, after declining for several years, remained flat for the first time in 2007, according to CMI Inc., which tracks usage. And six out of 10 shoppers said they're buying more generic products and eating leftovers more frequently.

Supermarkets, well aware of the trends, are working to show customers that they feel their pain.

Shoppers Food & Pharmacy recently extended a promotion at its stores that triples coupon redemption. "Fuel your family for less than the price of a gallon of gas," read signs in its stores.

Safeway is offering discounts at its gas stations when shoppers spend a certain amount on groceries. The supermarket also has Five Dollar Fridays, when it offers certain items, such as an eight-piece prepared chicken, for that price.

Giant Food, the area's largest grocery chain, offers shoppers their seventh milk purchase for free. It is also offering 5 percent discounts on customers' grocery bills when they fill five prescriptions. And the grocer expanded its private-label products to meet customer demand.

"With the situation with the economy, we're looking at doing additional promotions and showing consumers how to shop us cheaper," said Giant spokesman Jamie Miller.

Many grocers such as Whole Foods and Supervalu, which owns Shoppers, acknowledge that consumer cutbacks are squeezing their earnings this year. To deal with those declines, grocers are looking at other ways to cut costs, such as packing more products into delivery trucks, adding motion detectors to store lighting and wrapping less food in packages while selling them at the same price.

Whole Foods' new push for a more economical image may show just how desperate supermarkets have become to win the consumer dollar. The gourmet grocer, which has the nickname "Whole Paycheck," sells organic and natural foods as well as upscale prepared meals.

"Like every other retailer out there, we're fighting the same battle they are in terms of what we can offer our customers in these times," said Kristin Gross, a spokeswoman for Whole Foods' eastern division, which includes Maryland. "We want them to know that they can shop here and not break the bank."

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