Safeway announced last week that it was cutting prices on thousands of items in its stores by as much as 25 percent in every department. The new prices are identified with bright yellow tags showing the old and new prices, with additional savings for Club Card members. Banners and signs announcing the reductions almost envelope the stores, while television ads broadcast the changes almost nightly.
It may seem a bit surprising. Safeway has long been one of the higher priced store chains, promoting a broad selection of high end products and organics over the cost saving strategies of other stores. In fact, Safeway’s sales strategy over the last several years has been in upgrading the perimeter of its stores, hoping to compete with the higher end stores like Whole Foods in the quality and selection of fresh meat and produce. A wide range of brands and products were also shelved among staples. Conventional brands, like General Mills, were priced higher than other local supermarkets, but organic and natural brands, like Bobs Red Mill and Natures Path were also available at prices comparable or lower than the competing upscale stores.
That strategy worked fairly well in a stronger economy, as more consumers were seeking natural and organic products. Times have changed.
According to a survey by Phil Lempert, 82 percent of consumers reported making shopping lists in June, up from 70 percent in January. The percentage of shoppers who said they compare store ads rose to 64 percent, and 46 percent said they shop at several stores based on price. More shoppers are looking to stretch their dollars as far as possible, using coupons, buying store brands, and buying cheaper cuts of meats.
Safeway is lowering the price of household staples, such as paper products, laundry supplies, coffee, as well as pantry items, by up to 25 percent, hoping to attract the new brand of frugal shoppers.Safeway is not the only store responding to this new trend. 60 percent of stores are lowering prices, and facing competition from WalMart and Target, which are expanding their grocery aisles. Whole Foods puts out regular ads on discounts and ways to save in its stores, and has even held classes on how to find deals in its stores. It also has a newsletter, The Whole Deal, featuring sales, low cost recipes, and coupons for store shoppers. Giant, Supervalu, Wegman’s, and other stores are also reducing prices. In addition, stores are updating local coupon policies to include or expand their double coupon allowances and increase “in ad” store coupons.
Stores are now competing vigorously for every one of your grocery dollars. Compare ads, combine discounts, use coupons, and ask about price matching. It’s getting easier all the time to achieve significant savings, and you just might find that with a bit of effort you can cut as much as 75% off your grocery bill every week.