Ralphs supermarket chain lowers prices, clips coupon savings
Ralphs Grocery Co. unveiled a lower-price policy Wednesday in what it said was a nod to beleaguered consumers struggling to pay rising food and gasoline prices. But the new plan also appears to be part of a wider business strategy to grab market share from rivals that has worked successfully for Ralphs' corporate parent in other regions.
The chain, which operates 262 supermarkets in Southern California, said it would lower the prices of thousands of goods that its customers buy most often. Additionally, it will retool its loyalty card program so that shoppers gain points based on purchases and collect cash rebates. The grocer has also changed its double coupon program, capping the savings a shopper can garner.
In moving to a lower-price strategy, Ralphs is trying to deal with intensifying competition for grocery dollars in Southern California and overcome its reputation as one of the higher-priced traditional grocers in the region.
It is dealing with new entrants such as Sprouts Farmers Market, a Phoenix-based purveyor of "natural" and organic food, and Fresh & Easy Neighborhood Market, a unit of British retailing giant Tesco. At the same time, discounters such as Target Corp. and Wal-Mart Stores Inc. continue to move into the packaged and frozen food market.
Ralphs hopes to win back shoppers such as Terry Supple of Woodland Hills, who has found discounter Target an attractive alternative for many grocery items. Supple recently compared the prices of a shopping list of nine name-brand items -- including Cheerios and Kraft mayonnaise -- and found that Target charged 36% less than Ralphs after factoring in promotions at both stores.
"Target's grocery department is limited, no meat or produce, but their prices on name-brand staples are great," Supple said.
He found that some items on sale at Ralphs were often higher than Target's everyday price, "but we shop at Ralphs for meat and produce and will look at their new prices," Supple said.
A more aggressive pricing stance by Ralphs, which is the largest grocer in the region, could help lower prices across the market.
"The other traditional supermarket chains can't just sit by and not respond if Ralphs begins to gain traction with this," said Andrew Wolf, an analyst at BB&T Capital Markets in Richmond, Va.
What Ralphs is doing is sacrificing some near-term profit by lowering prices to get more people in its stores.
