LAS VEGAS — A more disciplined approach to pricing by Roche Bros. Markets — as part of a concerted effort to lower its high-price image — enabled the chain to convince its primary customers it had lowered prices, a company executive said at the National Grocers Association Convention here this month.
The initiative was not quite as effective at convincing secondary shoppers, however, Arthur Ackles, director of marketing for the 18-store chain, said at the conference. The company's goal is to reach those secondary customers. “That's what we need to work on over the next year,” he said.
Wellsley Hills, Mass.-based Roche Bros. recognized the need to enhance its price image early in 2009, when its high-end customers began looking for lower-priced alternatives, Ackles said.
“Loyalty is not what it used to be, and customers today are more willing to shop around,” he pointed out.
Historically, Roche had separate pricing strategies for groceries and perishables, “with no overall strategy to get a better message across,” he acknowledged. Its goal in adopting a new pricing strategy was “to put us in the same ballpark as our competition — to stay close to them while staying below the tipping point [the point at which shoppers perceive a difference].”
One result has been more positive item movement in two of the last three quarters, he noted.
Store pricing had previously been left to the chain's information technology department, Ackles said, “so our first step was to put in a pricing department, with a pricing director to generate a price strategy and a price image; to direct competitive price checks; and to analyze the results.
“Initially we had to prioritize the categories in which we wanted to change our image, and we did that in waves — over the course of a year, rather than all at once — so we would get credit for what we were doing.”
There were several categories in which Roche Bros. didn't have any value items, “even where we had a private label,” Ackles said, “and one of the things we intend to do is add a second-tier line — Topco's Clear Value — to make our private-brand pricing more effective.
“We also need to bring more consistency to pricing through automation, and we need to use more zone pricing in each of the three zones in which we operate.”
In developing its new approach to pricing, Ackles said Roche worked with consulting firm Willard Bishop LLC, Barrington, Ill. Speaking in the same workshop as Ackles, Jon Hauptman, a partner at Willard Bishop, said the key to pricing is making consumers happy.
“They want to find ways to stretch their budget and feel like smart shoppers,” he explained. “Focusing on your price image will be particularly important going forward because of the economy, the expectation of price increases of 2% to 3% this year and the constant threat of increasing competition,” Hauptman said.