[August 21, 2008]

Food fight: Grocers battle on prices as shoppers tighten budgets: Grocers try to help consumers cope with soaring costs

(South Florida Sun-Sentinel (KRT) Via Acquire Media NewsEdge) Aug. 21--Price is the new battleground in the grocery business, as higher food costs and pocketbook woes make service, quality and other classic selling points less critical to shoppers.

Publix Super Markets Inc. is cutting prices on "essential" grocery items, Save-A-Lot Food Stores Inc. offers low-price meal advice to shoppers and Wal-Mart Stores Inc. continues to tout its affordability on foods.

With food prices soaring, a South Florida shopper had to spend nearly $132 in June to buy the equivalent of $100 of groceries in June 1998, according to the U.S. Bureau of Labor Statistics. Prices for bread, rice, milk and beef products are at or near 10-year-highs in Southern urban areas, the data show.

Publix's campaign, introduced earlier this month, will reduce the prices of goods that customers are known to regularly buy, said Kim Jaeger, spokeswoman for Florida's largest grocery chain. The campaign began with a $3.79-a-gallon price for Publix private-label milk. The price had crested $4.00 recently.

"The essentials campaign is something we created this year, because we do realize people are struggling because of the state of the economy," Jaeger said.

She said shoppers are using more coupons and buying more private- label brands.

Elena Gonzalez, 22, a Margate resident, has a 2-year-old son and she's glad Publix has reduced the price of its milk because she buys a few gallons a week. Gonzalez knows dairy and beef prices have shot up, but her family's needs haven't changed.

"It doesn't change the amount I spend," said Gonzalez, who does computer technical support. "I just can't buy everything at one time."

Data show shoppers are shifting their priorities in a down economy.

In May, 40 percent of shoppers said they would buy the cheapest version of a product on a shopping list, up from 33 percent in February, according to a TNS Retail Forward survey.

Mandy Putnam, analyst at TNS Retail Forward, said in a report that stores focused more on lower prices are gaining shoppers.

Coral Springs resident Mary Mitchell said even though she shops at other stores, including Winn-Dixie and Whole Foods, she is considering shopping more at Wal-Mart because the prices are "family oriented."

A Florida Farm Bureau Federation annual food price survey of four supermarkets released this month found prices up an average of 7.1 percent compared with last year. Wal-Mart had the lowest total for 25 selected items, such as Alpo dog food and seedless grapes, at $80.68. Publix was the highest at $98.74. Each store had a price advantage with at least one item.

As retail giant Wal-Mart has added grocery items over the past decade, it put pressure on Publix's prices.

Wal-Mart spokeswoman Melissa O'Brien said the company works with suppliers and analyzes its food distribution network to make sure cost increases aren't automatically passed to customers. She said Wal-Mart has been a price leader for a long time.

"The customer is very savvy," O'Brien said. "They know that it's not just about getting one or two products at a low price, it's the whole basket."

Another South Florida grocer, Save-A-Lot, is rolling out its "Fuel Your Family" program, which gives customers 20 to 30 family meal ideas costing less than $4.11. In July, that was the national average for a gallon of regular gas. Spokeswoman Jaime Powers said the promotion is intended to help people cope with food price inflation.

Dania Beach resident Pamela Ali said although prices are going up for many things, grocers are struggling just as much as shoppers are.

"I think they're doing the best they can," said Ali, 61, who runs a home-based nutritional foods business and Web site. "Take into consideration the gas prices, everything has gone up."

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