Pittsburgh's dominant grocer Giant Eagle on Wednesday unveiled a program meant to guarantee that cost-conscious shoppers won't see price hikes on certain items -- at least until after Jan. 2.
The O'Hara grocer's "Low Price Lock" marketing campaign locks in prices on more than 300 items from store-brand spiral hams at $2.29 a pound to a 100-count bag of Top Care cotton balls for $1. The grocer said some prices were reduced before being locked.
Giant Eagle's campaign takes aim at one of the big concerns in the food businesses: Rising commodity costs are expected to keep heading up as energy prices fluctuate and the nation copes with the fallout from a crippling drought this summer across the Midwest.
But it also echoes efforts by retailers of things like clothing, toys and electronics that are working to protect the important holiday shopping season from consumer fears created by an uneven economic recovery, a hard-fought presidential campaign and the potential pain of deep, automatic federal spending cuts.
Apparel and toy chains have moved aggressively this fall to enhance layaway programs that might get shoppers to buy early and stretch the costs over months. Numerous holiday discounting programs also have been touted.
Like gift giving, food shopping also peaks toward the end of the calendar year as families gather for Thanksgiving and people host parties around the December holidays. Helping protect consumers and their wallets during the season is important, said Rob Borella, senior director, marketing for Giant Eagle.
"These are uncertain times for us in terms of the costs we see from suppliers and uncertain times for customers in terms of the prices they see," Mr. Borella said. "This is an effort to take away that uncertainty."
The concept of locking down grocery prices has been used by various chains around the country. The Bi-Lo chain, based in Greenville, S.C., introduced its "Price Lock" program in 2010. In that case, users of the grocer's loyalty card get a set price on certain items for an eight-week period.
It's not clear if Giant Eagle will continue its program past Jan. 2. "As food and commodity prices have continued to rise for some time, we all have limited visibility as to what will happen in the new year," said Mr. Borella. "That said, we are always working to provide consumers the best possible value, and will continue to do so."
Supermarkets aren't just competing with other grocers. Discounters, dollar stores and drugstores all want a piece of the market. In the Pittsburgh area, the Bottom Dollar Food limited assortment chain, part of Belgium's Delhaize Group, has been adding locations aggressively, but competition is also coming from Wal-Mart, Target, Shop 'n Save, Aldi, Walgreen and other retailers. Meanwhile, consumers' focus on savings has not let up and that's reflected in the approaches the retailers have been taking.
Wal-Mart this year has been marketing directly to Giant Eagle's customers with commercials comparing receipts from the two retailers for similar items. In a recent presentation to investors, Delhaize commented that in the U.S., "Price investments have impacted our profitability."
Bottom Dollar Food spokeswoman Tenisha Waldo, asked to comment on the new pricing program from Giant Eagle, said, "We are committed to having the lowest prices in town for our customers, and we stand behind our best price commitment with our 'We Won't Be Beat' guarantee, where we will beat any competitor's price on the same item by a penny."
In addition to the price lock concept, Giant Eagle is bringing its fledging limited assortment chain, Valu King, to the region later this year with a store on McKnight Road in Ross. The concept has been tested in smaller markets such as Johnstown and Erie.
A couple of weeks ago, the grocer began airing spots featuring customers talking about how they had saved thousands of dollars at Giant Eagle annually through things like double coupons, loyalty card deals and gas discounts.
Mr. Borella did not disclose financial details, but said the marketing investment in the price lock program is into seven digits.
Even as retailers compete with each other, they must all cope with the shifts in commodity prices.
Nationally, the U.S. Department of Agriculture reported in September that retail food prices, on average, had been relatively flat this year so far, although many are up from a year ago and the effects of the drought may start becoming more evident soon.
Overall this year, the USDA forecast grocery store prices will rise 2.5 percent to 3.5 percent. "Looking ahead to 2013, inflation is expected to remain strong for most animal-based food products due to higher feed prices," according to the report from the department's Economic Research Service.
The U.S. Bureau of Labor Statistics reported in August that the consumer price index for the Pittsburgh area rose 4.3 percent between the first half of 2011 and the first six months of 2012. Food prices rose 4.5 percent, while energy costs were up 2.5 percent, the government agency reported.businessnews - holidays
Teresa F. Lindeman: firstname.lastname@example.org.