Grocery stores cutting out the weekly specials

Bowing to busy consumers who are less willing to spend time searching for deals, some traditional grocery stores are cutting back on promotional discounts and moving toward the everyday low prices of Wal-Mart Stores Inc. and other discounters.

In recent months, several regional grocery chains have reduced prices on everything from Kraft macaroni & cheese to Ragu pasta sauce in an effort to lure back shoppers who have defected to discount grocers. In most cases, the stores also stopped offering weekly bargains on items like cereal or yogurt.

For decades, most traditional supermarkets have lured price- conscious shoppers with cheap weekly specials and made up the lost profit by keeping nonsale prices substantially higher. Now, the prevalence of shops such as Costco Wholesale Corp., dollar stores and discounters such as Wal-Mart has conditioned consumers to expect inexpensive goods every day.

In May, California supermarket chain Raley's reduced the daily price on 7,000 items, including Sunnyside Farms butter and Wishbone salad dressing. Giant Eagle Inc. of Pennsylvania has cut the price on 4,300 items since November, and Piggly Wiggly operator Fresh Brands Inc. of Wisconsin cut prices on 4,000 goods in the fall. Supermarkets generally carry about 30,000 items. Wegman's Food Markets Inc., which serves parts of New York, New Jersey and Virginia, has cut the prices of 10,000 items.

The price cuts are in some cases fairly steep. Giant Eagle, for example, used to sell a 15-ounce box of Cheerios for $4.39 at most stores. In November, it cut the daily price to $3.88. In April, Giant Eagle cut the price again to $3.11. At Raley's, 10 packs of Capri Sun juice pouches sold for $3.49 and would go on sale about eight times a year at two for $3 or 4 for $7. Now, they sell for $1.98 daily and no longer go on sale regularly.

This doesn't mean supermarkets aim to compete with Wal-Mart on every item; in most stores, the cuts apply to no more than 15 percent of their items -- typically so-called center-of-the-store goods, like toothpaste and toilet paper. Still, customers who have never loaded up on deals could save an average of 5 percent to 7 percent per shopping trip if they purchase a broad basket of goods, according to Willard Bishop Consulting, retail-marketing consultants in Barrington, Ill. Many families could save as much as a few hundred dollars a year in grocery bills by shopping at a store that has shifted its pricing structure.

In recent years, discount cards have become ubiquitous among food shoppers, and grocery chains don't plan on getting rid of them as a result of the new pricing changes.

Grocery chains are constantly adjusting their pricing strategy and have done so for decades. The recent moves toward everyday low prices are one of the most far-reaching attempts yet to beat back the discounter's growing encroachment. Traditional grocery stores controlled 52 percent of the nation's grocery sales last year, down from 81 percent a decade earlier, according to Willard Bishop Consulting. Nontraditional food sellers, including Wal-Mart supercenters, dollar stores and wholesale clubs, controlled 31.9 percent last year, up from 8.9 percent in 1994.

The new pricing policies at grocery chains are helping consumers cope with the rising cost of food. Food prices have been rising at progressively higher rates each year since 2002, and the increase hit 3.8 percent last year, according to the Bureau of Labor Statistics.

Shoppers, meanwhile, have become less patient when it comes to hunting for deals in the store aisles. Coupon use has declined each year for the past five years, according to NCH Marketing Services Inc., which analyzes promotional trends. Consumers redeemed 3.3 billion coupons in 2004, down from 4.5 billion in 2000, even as the number of coupons distributed rose for most of those years. Some consumers are put off by the growing strings attached to the special offers. More than one of every four U.S. coupons requires multiple- item purchases.

"I don't even read the circular," says Lauren Knezovich, a 27- year-old Pittsburgh resident who shops at Giant Eagle and grew up cutting coupons. "I stopped caring about that."

Customers of Raley's had complained they were wasting time driving between markets in search of the best weekly specials and buying food they didn't end up eating, says Bill Coyne, president and chief executive of the Sacramento, Calif., chain. Shoppers stockpiled so much sale food that some had to store it in their bedrooms, a shopper survey found. Nonsale items were selling slowly.

So the 138-store chain, facing the threat of Wal-Mart's fresh- grocery expansion in California, reduced prices on many items like juice and butter that face the stiffest competition from discounters. Now, a dozen Sunnyside Farms Grade AA eggs sell regularly at Raley's for $1.18, down from $2.79. The stores have stopped running 99-cent promotions on the eggs.

Large operators including Safeway Inc. of Pleasanton, Calif., and Albertsons Inc. of Boise still use high-low pricing but have been narrowing the gap between everyday and promotional prices. Albertsons, the nation's second-largest supermarket chain by sales, launched a program last year called "Check the Price" that reduced the everyday tag of price-sensitive items consumers buy frequently. This year, the company more than doubled the number of items that are getting price cuts.