Publix, Sweetbay Tout Pricing

Publix Super Markets here is lowering everyday prices on a limited number of items like milk and breakfast cereal in a move observers say signals hot competition and worry over a souring economy in Florida. Publix kicked off the program earlier this month by dropping the price on a gallon of its Publix-brand milk by about 20% at most stores. Last week, Publix advertised a similar drop

LAKELAND, Fla. — Publix Super Markets here is lowering everyday prices on a limited number of “essential” items like milk and breakfast cereal in a move observers say signals hot competition and worry over a souring economy in Florida.

Publix kicked off the program earlier this month by dropping the price on a gallon of its Publix-brand milk by about 20% at most stores. Last week, Publix advertised a similar drop in the price for Cheerios and maintained the milk discount. Maria Brous, a Publix spokeswoman, declined to say how long the prices would hold at those levels or to say how many additional items would be discounted, but she acknowledged that the new program — billed as “affording the essentials is essential” — comes in response to economic strain felt by Publix and its shoppers.

The program, which is being added to existing sale promotions at Publix, comes on the heels of modest same-store sales gains and a decline in net income during the second quarter.

“The Essentials program says that we understand that the economy has changed. We understand that you are sensitive to prices for certain core items,” Brous told SN. “The [discount] will vary by item, but what we're really trying to do is bring the best price to market that we can for our customers. At the same time, we haven't let go of what we've been known for for 78 years — quality and service. It's just another leg on our platform.”

Grocery chains across Florida in recent weeks also appear to be steeling themselves for tighter competition. Tampa-based Sweetbay Supermarkets late last month introduced new icons to call attention to its everyday low price positioning. “Sweet Deals” indicate the chain's EDLP items, which typically hold prices at the same levels for 10 to 17 weeks; “Sweet Sale” indicates a limited-time sale.

“It's a new, very aggressive campaign we're using to communicate our price message,” Nicole LeBeau, a spokeswoman for Tampa-based Sweetbay, told SN. “We're the only EDLP operator here, while everyone else is high-low, and sometimes that can be a hard concept to understand.”

The competitive market in Florida began heating up earlier this spring when shoppers became acutely aware of a slowing economy and retailers struggled to meet year-ago comparisons, Peter Lynch, chief executive officer of Winn-Dixie, based in Jacksonville, Fla., said in a recent conference call. Winn-Dixie admittedly “overinvested” in buy-one, get-one-free programs and other deals to maintain sales momentum, Lynch said.

Burt P. Flickinger III, managing director of Strategic Resource Group, New York, said Florida's real estate slowdown, along with resurgent retailers such as Winn-Dixie and the impending arrival of deep discounter Aldi to the market, has sparked Publix to emphasize a value message.

“Publix may have gotten too complacent when Winn-Dixie went bankrupt, and thought Winn-Dixie would just go away,” Flickinger told SN. “Winn-Dixie, to its credit, is bringing business back with strong promotional programs, and Publix is starting to fight back.”

Lynch of Winn-Dixie pointed to Albertsons as the most aggressive price competitor among conventional supermarkets, and suggested the pending acquisition of a number of Albertsons' Florida stores by Publix may cool the current competition.