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8/31/2003

The total package

By Tony Kindelspire
The Daily Times-Call

LONGMONT — Corporate offices for King Soopers, Safeway and Albertsons have disputed a price comparison story that included a Wal-Mart Supercenter in Fort Collins. The survey was conducted by the Times-Call and published Aug. 17. Prices at four Fort Collins stores were compared

The grocers major point was that the survey did not specifically include savings to consumers when loyalty cards are used. The story accompanying a published chart did note, “Leading grocers quickly point out that bonus card savings and other sales can give any store the lowest price on any given day. Likewise, grocers offer store brands at lower prices.”

The price survey was in anticipation of last week’s Longmont City Council vote to adopt a targeted update of the Longmont Area Comprehensive Plan. If the vote passed — and it did — it may pave the way for the possibility of a Wal-Mart Supercenter north of Colo. Highway 66 near U.S. 287. A number of area residents spoke against approving the big Wal-Mart store but council members said they believed that the majority of residents were in favor of allowing the store or a similar store to proceed.

The survey took into account a little more than 30 items and compared grocery prices among Albertsons, Safeway, King Soopers and Wal-Mart. There was some disagreement from grocers about whether comparable items were purchased but the story attempted to provide a reasonably fair comparison.

In response to the article, a survey conducted by King Soopers on prices checked the same day the first survey was done, showed a further price reduction to King Soopers consumers. By using the company’s loyalty card, the SooperCard, a consumer would have been charged $81.81, not $98.28 as originally reported. By using the SooperCard, this would have put a customer within $7.68 of where Wal-Mart prices were.

King Soopers, Safeway and Albertsons point out that they are “full service” grocers, offering a wide range of selection and services to customers. Albertsons, King Soopers and Safeway all make strong efforts to encourage customers to use their savings cards. Safeway’s savings card is called the Safeway Club card and Albertsons has the Albertsons Preferred Savings Card.

“First of all, anybody that’s versed in the grocery industry would tell you that with any short list of items, the pricing comparison on a given day in a given week can go one way or another,” said Derrick Penick, vice president of merchandising for King Soopers/City Markets from his Denver office. “These short list pricing comparisons are almost inherently misleading.”

That was a sentiment echoed by Penick’s colleagues at Safeway and Albertsons. All three stores offer some sort of discount card — or loyalty card, as they’re known — and all insist that the vast majority of their customers use those cards to obtain significant savings on their grocery bills.

Penick said the cards have not only replaced, for the most part, paper coupons, but they also allow the grocery stores to track specific purchases by specific customers, thereby allowing much more targeted marketing than the stores were able to do before.

The traditional grocers all agreed that knowing your customer, in this age of increased competition from Supercenters, be they Wal-Mart or any of the others, is critical.

“In my mind, there’s several differences between our value package and what they offer,” Penick said. “Ultimately, each customer’s going to make up their own minds.

“Don’t get me wrong — we understand and believe and we know that pricing is a critical component of the shopping experience. But not the only component.

“Hopefully, you as a customer will relate to that and say, ‘Hey, they are pretty competitive and I get all of this other stuff, too.’”

Karianne Cole, spokes-woman for Boise, Idaho-based Albertsons, said her company takes the same approach: Price as one component of the shopping experience.

“We provide an overall package,” Cole said. “We not only provide competitive pricing but we also provide high-quality products and excellent service.

“We’ve found that what our customers tend to value more is that overall combination.”

As an example, Cole pointed to a trend that all of the traditional grocers are taking part in: Stocking more Kosher and ethnic items in response to customer demand. In the past, shoppers only could find those items in specialty stores.

And all the grocery chains put a huge emphasis on freshness. Not that they always haven’t, but they feel it’s more important than ever — given the competition from Supercenters as well as from one another.

“We believe anyone who sells any kind of groceries is a competitor,” said Safeway spokesman Jeff Stroh. “We’ve always taken that view.”

Some stores are using their loyalty cards to provide value for the customer outside the walls of the store. Safeway’s Club card, for example, offers users the opportunity to accumulate United Airlines air miles. The Soopercard, Penick said, offers discounts at the Children’s Museum and the Denver Zoo.

“It’s the tool that we want in everybody’s hands,” Penick said.

The point is: traditional grocers are responding proactively to the competition by learning everything they can about their customers and making “service” their top priority.

“Obviously, people are price-concious, and I think that’s more relevant now than it was five years ago,” said Cole. “But we know that what drives customers into our store is that whole package we talked about.”

Times-Call business editor Tony Kindelspire contributed to this report.