Thursday, May 21, 2009

Grocery grousing

Albertson's is cutting prices.

That generated good buzz for the chain.

Except, Albertson's only is making those cuts in selected markets.

The buzz beyond those selected markets? Not so good.

I'm not sure why the chain didn't anticipate the news spreading beyond those selected markets. Newspapers, television, radio, Web sites, blogs -- tons of media picked it up, prompting people outside the selected markets to ask why they won't get the breaks.

All that has led to an interesting online discussion by RetailWire's Brain Trust, a panel of retail experts.

Yes, retailers factor in competition, cost of transportation, and other market-specific characteristics into their pricing strategies. Both Dan Rafferty, president of Rafferty Resource Network, and Charles Walsh, president of OmniQuest Resources Inc., make the point.

This problem has been around forever. Price zones are an important tool for retailers to be able to squeeze pennies of profit out of operations, wherever they can. What's new is the increasing attitude of entitlement in our society. The whiners noted above completely disregard the variations in cost to serve different markets, the balance of competition, etc. They are also probably ignorant about the price zones that exist within a given geography. Unfortunately, entitlement bloggers get a lot of attention. (Rafferty)

Zone pricing isn't new, it is in fact vital to the profitable operation of a regional to national retail chain for reasons that we all understand. The consumer has benefited from the competitive nature of the retail industry and it's long run of moving food prices ever downwards. To complain that the price of a gallon of milk in an LA Albertsons is lower than my store in Boise is as ridiculous as complaining that the price of a gallon of gas in those two towns is different and that this is somehow unfair. Really people, grow up. (Walsh)

But the "whiners" and "grow up" comments seem a little harsh. I would think Albertson's could've anticipated this problem. So, apparently, did Camille Schuster, president of Global Collaborations Inc., who weighed in with this comment:

Unless an ad specifies a local area, nothing is local anymore for a chain with today's technology.

George Anderson, editor in chief and associate publisher for RetailWire, sums his views up with a "customer's always right" sort of tone:

It seems to us that when a retailer has a larger number of consumers who have a sense of entitlement, stores have one of two choices: 1. Address the needs (including perceptions) of those consumers. 2. Not worry about what the customer thinks and watch them walk to the nearest store that wants them bad enough to cater to their childish desires.


Pocket Rocket said...

Karen, do you know what is going on with the Lion's Choice restaurant at I-40 and Soncy? just curious if it has been abandoned or not.

Jack Glen said...

Here is no any sale but you can save up to 40 to 60% discounts on your every purchase by using grocery coupons at

Karen Smith Welch said...
This comment has been removed by a blog administrator.
Karen Smith Welch said...

Hi Pocket Rocket ... We got a partial answer to the Lion's Choice question for my "Other People's Business" column a couple of weeks ago. The bank mess is the short answer, but here's the link to the

people's business: Offer cleans plates at Popeye's
I'll check in on Lion's Choice again soon.