Grocery stores pass on savings to attract shoppers

Monday, October 26, 2009 3:00 AM  |  Printer friendly version | E-mail to a friend | By Noelle Edwards

nedwards@salisburypost.com

Leading up to the true start of the recession, shoppers paid more and more for groceries as prices for commodities, such as gas and corn, climbed.

Almost a year into the recession, commodities prices have plummeted, and grocery stores have an opportunity to pass those savings along to consumers.

Jennifer Thompson, spokeswoman for Harris Teeter, said the Matthews-based grocery store chain tries to lower prices when the price of feed, corn, fuel and so forth dip.

The last time those commodities rose in price was September 2008, Thompson said.

Martha Swaney, an Aldi spokeswoman, said bananas are an example of a food that fluctuates in price pretty significantly over time. She said Aldi passes those price differences to customers, rather than taking the extra profit when the wholesale price is lower.

Still, Ken Mills, Food Lion's vice president of sales and marketing, said, customers are looking for low prices now more than ever, as the recession has continued to stretch people's finances.

"That's something that's very near and dear to our hearts right now," he said.

He said the competition between grocery stores has heated up because people are paying more attention to which store offers the best prices.

"People are cherry-picking grocery stores," he said.

As a result, he said, Food Lion bases pricing pretty closely around what customers are demanding. That demand, in turn, is based on the prices they can find elsewhere.

Mills said Food Lion is trying to communicate to shoppers through advertising campaigns and promotions that they don't have to shop around, that they can shop exclusively at Food Lion and trust they will get the best prices.

Harris Teeter, which, along with Aldi and Food Lion, is the third major grocery chain with a store in Rowan County, has ramped up coupon offers to draw customers to the store, Thompson said. Often customers can even find triple coupon deals.

"At least something's going to be on sale," she said, though customers can't be overly picky about the brand to take advantage of all the sales.

Thompson also said Harris Teeter sells private label food in most categories — 2,300 items. She said the company has been promoting these items more over the past year, and it tries to entice customers to try them out by offering to replace the food for free if the shopper doesn't like the store brand.

She said prices never went up on the Harris Teeter brands, even when other food prices were on the increase.

Mills said Food Lion has pushed its store brands as well, including creating new packaging and revisiting some of the foods to make sure the quality is equal to or better than name-brand products.

He said the company is also promoting "Meals for Less" — dinner for less than $10 — and "Quick and Easy Meals" to show people how to shop at Food Lion within their budget and time constraints.

Swaney said Aldi reduces prices by working at every step of the process to save money.

For instance, the company tries to get manufacturers to spend less in making the food and tries to get customers to bring their own shopping bags so the company doesn't have to pay for plastic or paper bags, which can save a lot over the long run, she said..

Other ways she said Aldi tries to save money as a company to allow grocery prices to be lower is by operating smaller stores that are cheaper to build and run, focusing on only the most common foods people are looking for, and helping manufacturers tweak recipes to taste better for less cost.