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Grocers Stress Deals to Shoppers as Economy Sours
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packexpo.com
July 21, 2008
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High gas prices are leaving consumers' wallets thinner, prompting many to cut back on expenses by brown-bagging it to work and eating more meals at home.

But with inflation at its highest level in 17 years, consumers relying more heavily on grocery stores for their food also are finding higher prices in their aisles. Food and beverage prices have climbed an average of 5.2 percent in the last year.

Recognizing that many households are squeezed, supermarket chains are trying to help customers stretch their grocery dollars. The initiatives range from affordable food summits at Stop & Shop Supermarkets, to heavier promotion of store brand products at Shaw's Supermarkets to "value shop tours" at Whole Foods Markets.

"We understand that the economy has made choices difficult for customers," said Faith Weiner, spokeswoman for Stop & Shop. "Our job as purveyors of food is to try to help them feed their families nutritiously when they shop at our stores, and we're continuing to work at that."

Results of a Nielsen Co. survey released Thursday indicate 63 percent of American consumers are reducing their spending to compensate for rising gas prices, an increase of 14 percentage points in the last six months. Seventy-eight percent of consumers said they're combining shopping trips, and more than half are eating out less.

"Swings in fuel supply will continue to have a tremendous impact on consumer shopping and buying behavior," said Todd Hale, Nielsen's senior vice president of consumer and shopper insights. "Retailers can take a creative approach to promotions, pricing and partnerships, such as aligning themselves with gas retailers to reward loyal customers with less expensive gas."

Stop & Shop, which has been lowering its prices aisle by aisle since September 2006 as part of its "value improvement program," is continuing with that initiative despite the tough economy.

"And when things have risen in price and are out of our control, we also have clearly explained it to customers," Weiner said. "When the price of milk went up, we posted signs in the stores."

In June, Stop & Shop also instituted "Real Deal" savings on items that customers typically use during the summer, such as paper plates, ketchup and Coke products.

The Quincy chain is planning affordable food summits at two Massachusetts stores. The events will bring customers together with economists, legislators, food bank representatives and consumer advocates to talk about why food prices have risen and how consumers can shop smartly.

Stop & Shop, Shaw's and Whole Foods also are more heavily promoting their less expensive store-brand, or private-label, products. The number of shoppers buying less expensive brands is increasing, according to Nielsen, from 23 percent in December to 35 percent. Nearly a third are using more coupons to save money, up from 25 percent.

"Some of the typical behaviors we see when people are feeling pinched is they do use coupons and they buy more private-label products," said Judy Chong, spokeswoman for the West Bridgewater-based Shaw's.

This week, Shaw's is focusing promotions on its store brand, Shoppers Value, and items to which customers are "trading down," such as ground beef, peanut butter and canned tuna.

Some Shaw's and Stop & Shop stores also offer gas discounts to customers based on their grocery purchases. If a customer spends $100 at a participating Shaw's, for example, she'll get a coupon for 10 cents off each gallon of gas purchased at an Irving station.

Meantime Whole Foods, which is trying to combat its high-priced "Whole Paycheck" image, recently shut down all of its locations an hour early. Its goal was to train workers in how to help customers find greater value in its stores by purchasing, for example, its "365" store brand products and value-pack seafood and meat items.

"There's great value in our stores, and we haven't done a great job of always getting that message outside of our stores," said Jeff Turnas, Whole Foods' North Atlantic regional president.

Whole Foods last week launched a new quarterly publication, available in all stores, called "The Real Deal." The inaugural issue includes coupons, money-saving tips, sale items, budget recipes for one to four people and entertaining, and an article about which organic food products to purchase first when money is an issue.

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