Shoppers are in the market for lower prices
The nation’s current economic slump is starting to hurt typically resilient supermarkets, says Jeff Noddle, chief executive of Supervalu Inc., the nation’s third-largest grocery company.
Noddle talked to The Times recently about Eden Prairie, Minn.-based Supervalu, which owns the Albertsons, Bristol Farms and Lucky stores in Southern California, discussing how the economy is affecting the supermarket business.
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What are shoppers doing to spend less at grocery stores?
It has been very clear since September and October that consumers were changing their habits.
People are buying more private label products, they are using more coupons, buying cheaper cuts of meat and they are stocking up during promotions. Basically, shoppers are doing all you would expect them to do in a period of inflation and a down economy. This has probably cost us 1% of our sales.
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Last year was the biggest year for food inflation in nearly two decades. Energy and grain prices were blamed for the increases, but now that they have sagged can we expect manufacturers and food producers to lower their prices this year?
I think we will see the rate of inflation go lower as the year progresses. In the interim, though, it’s kind of a battleground with manufacturers right now. We are pressing for a reduction in prices. We are pushing hard.
I don’t think the economy has felt the whole impact of the job reductions and layoffs yet, and as it continues to soften the manufacturers will have to be more aggressive with prices or promotions.
There is a point of disagreement at this point, but I think it will happen.
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How is the Southern California market different from the other regions where Supervalu has grocery chains?
Southern California has all different types of ethnic neighborhoods, and you have to customize the stores to that. Good real estate is so critical and location is key. People will travel great distances in California to do leisure activities, but they won’t do that to do their grocery shopping.
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What do you think bugs people most about grocery shopping?
In general, people don’t like to go grocery shop because they think it is a task or a chore. People always want better pricing. But people really depend on their local supermarket even when on occasion they stock up at the mass merchants.
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