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SACRAMENTO, Calif. -- With Wal-Mart looking to expand its supercenter concept into northern California, locally based Raley's launched a new everyday low price (EDLP) strategy yesterday on a significant selection of products in its 125 Raley's, Bel Air Markets, and Nob Hill Foods stores.
According to the Sacramento Bee, the traditional "high-low" retailer is permanently marking down about 5,700 items. That represents about 19 percent of the merchandise at a typical store in California or Nevada.
"What we're offering is fair, consistent prices every day," Raley's president and chief executive Bill Coyne told the newspaper.
Raley's new pricing averages an item's sales price and its regular price. The goal, Coyne said, is to increase Raley's sales volume by making shopping more convenient. He said consumers wouldn't need to time purchases and stock up on sales items, something Raley's studies show shoppers dislike, according to the report.
Coyne vowed that the supermarket retailer wouldn't cut back on customer services such as bagging groceries and carting them to customers' cars. The company's stores carry, on average, 25,000 items that won't be part of the first wave of price reductions, but Raley's will continue to press its vendors in an effort to add more items to the EDLP mix.
Raley's officials claim the "Everyday Value Price" strategy is strictly in response to consumers' needs and not a reaction to Wal-Mart's impending expansion into Northern California. However, past attempts by general merchandisers to match Wal-Mart's EDLP strategy (most notably by Sears and Kmart) have ended in abject failure.
Wal-Mart has opened three supercenters in California over the past year and half, including one in Stockton. The company has three more supercenters under construction in Southern California. It has plans for at least three dozen more in the next four to five years, including stores in Lodi, Roseville, Woodland, and Yuba City.
Raley's appears to be basing its pricing plan partly on a survey of 500 California and Nevada consumers that found most shoppers don't like fluctuating prices. The study was commissioned by Raley's and conducted by marketing expert Dennis Tootelian of California State University, Sacramento. According to the survey, nearly half of consumers -- 47 percent -- visit several stores when grocery shopping, and 57 percent stock up on sale items.
But the downside to that behavior is that about six in 10 shoppers either throw out or give away some of what they purchase on sale because they bought too much. Sixty-seven percent of respondents said they stocked up on sale items that they didn't use before the recommended expiration date. Additionally, about three in four said that they had to store grocery sale items outside the kitchen for lack of space.