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.

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  1. That is interesting.

    Safeway lost our business just about entirely, during the last 2 years. Their prices have gone through the roof and all the “deals” we used to get (mostly buying a few items in bulk) disappeared when gas prices went up last year.

    It continues to amaze me how many of our neighbors believe Safeway is “Cheap.” Since locally all we really have is Safeway and Raleys/Bel Air. The “high end” grocery stores have not really raised prices, have much better gas deals, and were competing better on price in the first place. It amazes me how many people shop by “appearance” rather than actually comparing prices.

    It is nice to know that Safeway may have some good deals and we should go there once in a while to see if we can benefit from these price cuts. They can gain our business back – but it’s easier to lose people than to win them back – that is for sure.

  2. I also noticed how Safeway and King Soopers (Krogers)prices now are bogo but that a year ago these same products were half the price they are not. So the sale is really not a sale. I also noticed that they will put something on sale, except they left off one flavor of the item, which when you buy, you pay full price for. An example of this would be all Skippy Peanut Butter will be on sale, except the creamy. the signs are on all but that one. Because they never did this before, you think that the sign is just missing. But it isn’t. It’s just not on sale. They cheated us legally!!!
    Then there is the tag that says $.89 or by 5 for $4.00. Anybody got a calculator? Personally, I like sales. But I don’t need to stand in the aisle figuring out the cost of everything. Why don’t the just put the cost of one item on the item? Now I am more likely to go around the outskirts of the store, buy meat, veggies and dairy, and just forget the rest of the store.

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