Groceries' food fight benefits consumers

Grocery retailers are trying to capture business through lower prices and greater sales volume.

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Harvest Foods shoppers John Hubbard (left) and Jose Garcia (right) look over rows of colorful produce interspersed with harvest and Halloween decorations Wednesday evening. As many grocery chains lower prices to compete in the current economy, locally owned stores focus on customer experience and convenience as well as involvement in the community as their strengths.

The little tags began showing up two weeks ago on the shelves at Safeway. Yellow slips for grocery items from pet food to pizza and everything in between, showing off new prices slashed by as much as 30 percent.

The movement is not just a promotion, Safeway officials say. It is long-term and part of an ongoing trend among grocery retailers to capture business through lower prices and greater sales volume at a time when consumers have never been more starved for value.

Last week Wal-Mart announced it will offer "weekly deep savings events and new everyday low prices on thousands of items across the store" through the holidays.

Earlier this week Costco officials said they will start accepting food stamps at their warehouse clubs across the country -- a turnaround from their previous stance last spring that there likely wouldn't be enough demand to warrant the change.

The gloves are off for grocery stores grappling for their piece of the consumer pie. With the lingering effects of the recessions, stores are trying to cater to a more frugal shopper.

"I've been in this business 33 years. It's more extreme than any time I've ever experienced," said Greg Sparks, president of Seattle's Safeway division. "Who knows when the economy is going to get better?"

Sparks said the pricing cutbacks at Safeway's 212 Northwest stores are a result of the company "listening to customers."

From corporate chains to local independent retailers, consumers are sending a message about value through spending.

"We have a lot of penny-pinchers that shop here," said Kevin Greenwalt, sales manager for Andy's Market. "If we're out of line with our prices, they'll tell us."

The health-conscious College Place retailer known for its bulk foods, inexpensive produce and nutritional supplements sees many of its consumers with weekly ads looking for the best prices from store to store, Greenwalt said. Consequently, affordability is a huge issue, even for grocers with a niche market.

Greenwalt said prices were slashed at Andy's Market on 9,000 items in January and February of last year. The change came before the pinch of the recession to mark the return of owner Walt Anderson, who had stepped away from the stores' operations due to health issues.

The timing couldn't have been better, Greenwalt said. While many stores are reducing employment and facing losses, Andy's has experienced double-digit increases and is hiring. He said many of the larger chain retailers can afford to cut their everyday prices, which he said are often 10 to 15 percent higher than the smaller stores.

Fellow independent retailer Nolan Lockwood, owner of Walla Walla's Harvest Foods, said his store constantly compares prices to its competitors. He said operators try to keep their prices in the ballpark but also focus on offering a different kind of value.

The benefit of an independent store is profits remain in the community, he said. The stores often contribute to local causes. He said prices can often be secondary to the consumer's perception of value.

"Some may find value in pricing, some may find it in service, some may find it in ease of shopping," he said.

Harvest Foods has set itself apart by including postal services, wine-tasting, senior discount days, delivery services, weekly giveaway drawings and a Halloween coloring contest for every age group from babies to senior citizens.

He said consumers will have to determine where they will get the best value, especially as more stores reduce their grocery costs.

"At times it's probably confusing for the shopper," he said. "It can give the message that maybe other stores are not being as competitive."

Sparks said the cuts at Safeway are no "smoke and mirrors" trick.

The economy changed shopping habits, and retailers have no choice but to respond accordingly.

Before the recession, a sale on steaks might have prompted consumers to buy not only for that night but also for the next week.

"You don't see people doing that anymore," Sparks said. "They buy for today, tomorrow or this week. They'll worry about their budget for next week then."

There's more: Two years ago, Sparks said, about one-third of all Safeway's meat sales were the result of promotions. Now about two-thirds are through promotions. Meanwhile, more consumers opt for ground beef between the sales.

"Basically what people are saying is, 'I want steak, but I'll wait until I see an ad or a reduced price.'"

Consumers, he said, are also changing their mindset about how far they're willing to travel for a deal. In a nonrecessionary time Sparks said location tends to be the No. 1 factor in determining where consumers will buy groceries. Price, he said, might be fourth. Now, price is undeniably the most important.

While stores are cutting prices, none is willing to lay claim to having the lowest prices across the board. Consumers will have to determine where they want to spend their money.

"We think happier customers will mean more customers in the store," Sparks said. "That means good business for us short-term and long-term."

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