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The Wall Street Journal suggests that supermarket chains that have aggressively lower prices and marketed around the core notion of value – such as Kroger and Ahold - seem to be performing better, with stronger same-store sales increases, than those that have been “slow to reduce their prices” – it singles out Supervalu and Safeway.

According to the Journal, “In part, shoppers have been chasing bargains, visiting a variety of retailers and snatching up only low-priced goods. Now, about 1 in 3 shoppers buy exclusively items on sale, twice as many as 18 months ago, according to market research Information Resources Inc. As shoppers seek the best deals, retailers with low price reputations are posting strong same-store sales while other grocers are scrambling to find a new game plan.”
KC's View:
If you are going to look at these two specific retailers, I think it is fair to say that Safeway and Supervalu are very different cases. Safeway has bet its future on its Lifestyle format stores, which still strikes me as a good bet long-term even if presents some short-term problems during a recession. My impression, at least, is that Safeway is working to deal with any perception issues that may exist while not doing anything that will erode the brand equity it has built up in the format.

At Supervalu, there is a different problem. People I talk to seem to suggest that Supervalu has a hodgepodge of banners where the whole may be less than the sum of the parts, because at least some of the banners don’t have a core value or values proposition that differentiate them in the minds of shoppers. That’s what new CEO Craig Herkert seems intent on finding and defining …and probably getting rid of the pieces that do not fit.