Low-Key Price Cuts Prove Effective

LAS VEGAS An Oklahoma retailer who lowered prices on 200 items to come as close as possible to prices at a new Wal-Mart supercenter that opened near one of his three stores said the stores benefited from not calling special attention to the pricing. When customers saw lower prices with regular shelf tags, they were impressed, and my sales, gross profit and overall mix improved, Jim Brown, president

LAS VEGAS — An Oklahoma retailer who lowered prices on 200 items to come as close as possible to prices at a new Wal-Mart supercenter that opened near one of his three stores said the stores benefited from not calling special attention to the pricing.

“When customers saw lower prices with regular shelf tags, they were impressed, and my sales, gross profit and overall mix improved,” Jim Brown, president and chief executive officer of Doc's Country Mart in Bixby, said during a presentation at the National Grocers Association's annual convention here.

“My reasoning was that I didn't want to push the pricing program too heavily, because it would mess up my mix, although my warehouse [Associated Wholesale Grocers, Kansas City, Kan.] said I shouldn't just put the items out there with regular shelf tags. But it worked.”

Brown also said he was able to reduce advertising expenses last year by approximately $100,000 by using loyalty-card data to cut back on his use of advertising circulars — from 37,000 two years ago to 17,000 last year.

During the same session, Dennis Lindsay, chief financial officer for Nugget Market, Woodland, Calif., said that although the nine-store company prides itself on perishables, “grocery sales pay the rent.”

Accordingly, he said, Nugget put a stronger emphasis last year on promoting groceries, seeking out its own deals and moving the merchandise through its own warehouse for end-aisle displays. Grocery sales increased 0.5% during 2006 as a result, Lindsay told SN after the meeting, and grocery margins jumped 0.5% as well.