It wouldn't make much sense for any of Southern California's debt-burdened supermarket chains to launch a price war. That would only make life tougher for them.
Then again, price wars have a way of getting started even when few, if any, of the businesses involved want them.
That's what is both worrying some supermarket analysts and raising hopes among consumer advocates these days. To be sure, most experts downplay the chance that recent developments roiling the Southern California food store market--including the return of the Smith's Food & Drug Centers chain--will trigger an all-out price war.
Much more probable, they say, are localized price battles among the individual supermarkets in the neighborhoods that Smith's enters, at least for the first several months after the new stores open.
Still, if one of the top chains gets jumpy about intensified Southern California-wide competition and slashes prices at all of its stores to hang on to customers, there could be a major chain reaction.
"We're not going in to start a price war, but if somebody else wants to cause one, we'll be right in the middle of it," said Jeffrey P. Smith, chairman and chief executive of Smith's Food & Drug Centers.
Smith says his chain plans to offer an "everyday low prices" approach in line with that of Lucky supermarkets, which is regarded as having the lowest across-the-board prices among the big Southern California chains. Smith's will provide face-value discounts on manufacturers' and competitors' coupons, rather than the "double coupon" discounts offered at Vons, Ralphs and Alpha Beta.
Salt Lake City-based Smith's, which plans to build 50 to 60 giant supermarket-drugstores in the area by 1995, says it hopes to attract customers over the long run largely with its "one-stop shopping" format.
If that approach fails, "that's when they're going to do something" to undercut competitors' prices, predicted Brad Freeman, a partner in a Los Angeles buyout firm that specializes in supermarket deals.
By itself, Smith's won't be big enough to trigger a price war. Even when all of its proposed Southland stores are built, the company says, it expects to gain no more than a 6% market share. "We're not looking to cause a total disruption in the marketplace," Smith said.
