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ST. LOUIS – With an anticipated expansion of Wal-Mart’s Supercenter presence on the horizon, local grocers here are circling the wagons around dueling price cut programs.
Schnuck Markets, Inc., based here, unveiled a major price-lowering campaign on more than 10,000 popular everyday brand items in all of its 68 area stores. Local rival Dierberg’s Markets Inc. vowed to respond to any predatory pricing moves.
At market leader Schnuck’s, top executives said the price cuts represent a major shift in pricing philosophy, and added they are hopeful the new strategy will keep the 68-year-old grocer even more competitive going forward.
“New Low Price tags will alert our customers to significant savings on items in grocery, dairy, frozen food and drug/general merchandise,” said Scott Schnuck, chairman and c.e.o. “They will definitely notice a difference on their next cartload of groceries."
Throughout the past two years, Schnuck said, the company’s store, warehouse, facilities, transportation and central office associates have put forth a tremendous effort in cutting costs, eliminating waste and improving operating efficiencies.
"We met with our associates and explained that if we could cut operating costs, we could pass those savings on to our customers,” Schnuck said. “They rose to that challenge, and now our customers are reaping the benefits."
The move apparently prompted Schnucks’ cross-town independent competitor Dierbergs to counter with a promise that it will react to any items it needs to.
"We've always been competitive, and we always will be. That's the bottom line," Greg Dierberg, president and chief executive of Chesterfield, Mo.-based Dierberg’s, was quoted as saying in local reports.
Schnuck’s leaders first tested the program by lowering prices in out-of-state markets, said the company’s s.v.p./marketing and merchandising Randy Wedel.
“Customer response was so encouraging that we expanded the rollout into our home base,” Wedel said. “Last year, we lowered prices on 3,200 items in the metro area and are now prepared to take the next step by lowering prices on an additional 10,000 items.”
Wedel said when Schnuck’s initially lowered metro St. Louis area prices, “We tagged them as ‘Price Breakers.' At the same time, we also aggressively promoted ‘10 for $10' items and continued our traditional pattern of advertising special buys and matching competitor coupons. Now, we are making a significant, long-term investment, and we want our customers to know about it."
In addition to lower prices, aggressive specials and double coupons, Scott Schnuck said the chain is offering “the added value of the tremendous quality found in our perishable products such as Certified Angus Beef. Now, more than ever, we believe Schnuck’s offers customers the best total value - lower prices, without compromising quality or service.”
Acknowledging that competition is obviously a factor in the new strategy, Schnucks executives said their family-owned company is performing well under increasing competitive pressure from traditional grocers as well as from big box operators.
“As an example, our stores are currently competing favorably against 55 Wal-Mart supercenters across all markets, and like most other businesses, we continue to battle rising expenses, including fuel and healthcare,” said Todd Schnuck, the company’s recently appointed president. “Yet, I believe our company remains strong thanks to our associates, our commitment to our customers and our resolve to remain competitively priced in all markets we serve."