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Recession Changing Supermarket Marketing Strategies
JULY 01, 2009 --
Supermarkets across the U.S. are using new marketing tactics to retain and increase their customer base in the face of a recession that has consumers searching for effective ways of saving money.
There is renewed focus on center store sales, increased emphasis on private label products, cutting prices and boosting discounts, and even giving away free groceries to keep cash registers ringing.
Late in June, Kroger Co., the second largest seller of food in the U.S. after Wal-Mart Stores Inc., announced a 3.1 percent sales increase over last year at stores open at least 60 weeks, excluding fuel. CEO David Dillon told The Wall Street Journal that center store is experiencing a resurgence, contributing to profits of $435.1 million for the quarter ended May 23, up from $386 million last year. Excluding fuel, total sales increased 3.9 percent.
Dillon also said that more consumers are turning to private label products, and that Kroger has been able to capitalize. Others are doing the same. At Publix, based in Lakeland, FL, some private label items are offered free with the purchase of the corresponding national brand. Food Lion, a Salisbury, NC-based chain, provides a 25-cent credit off the next grocery bill for each private label item purchased.
Earlier this year, customers at Shaw’s Supermarkets, a West Bridgewater, MA chain, received $20 or $30 worth of free groceries with the purchase of grocery gift cards worth $250 or $300 as part of a refund rewards program. It was part of an effort by parent company Supervalu Inc. to boost sales during the recession.
On June 16, Stater Bros. Markets, San Bernardino, CA, said it was offering new, lower prices at all 166 of its stores.
“We know our customers are having a hard time making ends meet,” explained Jack H. Brown, chairman and CEO. “That is why we’re offering even lower prices to help the families we are privileged to serve make their dollars go even further.”
Meanwhile, Spartan Stores, a grocery supplier to independent grocers and operator of 99 retail stores throughout Michigan, announced June 21 it is providing support to General Motors auto workers who lost their jobs due to the closure of a GM metal fabricating plant in the area. The Grand Rapids, MI-based Spartan provided Michigan Proud bar coded cards offering a 10 percent discount on groceries and 3 percent on fuel to the United Auto Workers local union for distribution to workers affected by the plant closure.
Alan Hartline, Spartan’s executive vice president of merchandising and marketing, said the program “is our way of showing appreciation for the contributions of auto workers and the positive impact they have on our communities and families, by lessening the expense of food and fuel during this challenging time.”
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