Groceries’ Pitches Reflect Effects of Rash of Mergers
Antitrust suddenly has commercial appeal.
At least that’s the hope these days of major Southern California grocery store chains competing with newly merged Vons and Safeway and the perhaps-to-be-merged Alpha Beta and Lucky Stores.
On television and radio and in newspaper ads, representatives of Hughes Markets, Albertsons and Ralphs Grocery Co. are proclaiming the evils of mergers and the virtues of consistency.
“Check out Hughes Markets,” says one radio spot. “It’s one place that hasn’t changed hands, or anything else for that matter. . . . And the peanut butter? It’s right where it was last week.”
“If somebody’s shelling out millions for supermarkets, who’s really going to foot the bill?” asks the “supermarket detective” in an Albertsons’ ad that sounds like it was written by mystery novelist Raymond Chandler. “Albertsons has low prices, and they’re merging with nobody.”
The pitches are the latest signs of Southland supermarkets slugging it out over prices, service and quality. They are one way grocery chain mergers are being felt throughout Southern California.
They are aimed at customers who might be leery of the effect of Vons’ acquisition in late August of 172 Safeway stores in Southern California and the proposed merger of Lucky supermarkets with Alpha Beta, which is owned by American Stores of Irvine.
The latter combination was stalled last month by a federal judge in response to an antitrust lawsuit filed by California Atty. Gen. John K. Van de Kamp, who seeks to halt the merger.
The idea behind competitors’ ads, industry analysts say, is to take advantage of customer fears of higher prices and their desire for dependability.
The supermarket industry is huge. Food sales hit $313 billion in the nation’s grocery stores last year--with 73% of that spent in supermarkets, according to Progressive Grocer, a Stamford, Conn.-based trade publication.
Supermarkets typically spend 1% to 1.25% of their gross sales on advertising on radio and TV as well as newspapers, flyers, mailers and in-store promotions. That translates to annual advertising outlays by the large grocery chains of more than $300 million.
The high stakes are a major reason local chains want to exploit the merger issue.
“With all the mergers in L.A., many customers are going to be confused by where they shop for groceries,” insisted Al Marasca, Ralphs’ executive vice president of marketing. “This is the time for customers to rely on the consistency that Ralphs stands for.”
As a result, Ralphs has been running television commercials showing empty shopping carts leaving competitors’ chains and barreling down the street on their own to a Ralphs store. The ads are part of a “Change for the Better,” multimillion-dollar campaign in which the Compton-based chain hopes to capitalize on shoppers’ confusion over the mergers by touting fast check-out, low prices, unlimited double coupons and 24-hour operation.
Since last year, Ralphs has increased its advertising about 20%, estimated Brad Ball, president of David, Johnson, Mogul & Colombatto, which created the commercials. Meanwhile, Ralphs and the Giant, a chain of superstores owned by Ralphs, have combined advertising to get more bang for each advertising dollar, Marasca said.
At the same time, Los Angeles-based Hughes plans to return to television commercials after abandoning the medium 18 months ago.
“It’s because of the competitive situation,” acknowledged Chairman Roger Hughes. “If you don’t appear on TV, there’s the possibility that you can lose your identity.”
Meanwhile, Hughes’ aggressive 60-second radio ads tell consumers that “if the recent grocery store merger mania has you wondering which aisle the peanut butter is on, check out Hughes Markets.”
‘Non-Gimmicky’
“Strategically, when your competitors merge . . . there’s a great opportunity for a stable company to take advantage of,” said Terry Bowman, senior vice-president with BBDO/Los Angeles, which handles the Hughes account. “If your store changes its name, management or format, or it closes, you’re a target, a very obvious one.”
The Hughes campaign, Bowman explained, is designed to show that Hughes has been stable for a long time and “has been very consistent in terms of operations and pricing.”
Boise, Ida.-based Albertsons, which also has a relatively small advertising budget, is promoting security, too.
“We’re saying that in the midst of all this supermarket confusion, you can depend on Albertsons to help save money and get all your shopping needs in a clean, wide-aisled, non-gimmicky atmosphere,” said William Marks, account director at Foote, Cone & Belding in Los Angeles, which creates Albertsons ads--including a new series of 60-second radio commercials featuring “Kay Stark, supermarket detective.”
In the ads, tough-talking Stark provides advice and comfort to apparently traumatized shoppers whose neighborhood stores have changed names.
“Sounds like it got caught in the big mergers,” a gruff-sounding Stark concludes. “A lot of supermarkets are merging, and that’s making a lot of shoppers nervous.”
Nervous or not, the response of Von’s and Dublin, Calif.-based Lucky Stores has been to reassure customers in their expensive television campaigns that important things haven’t changed.
Late last month, El Monte-based Vons Cos. began a four-week “grand-opening” campaign featuring longtime Safeway employees noting such things as lower prices and better selection.
“They’ve dropped the prices, but they haven’t dropped me,” said JoAnn Knott in one spot. Knott is a former Safeway checker who now works at Vons. Another features John Kosha, a produce manager, who says his store now has “all kinds of unusual things, and all the usual things like me.”
A major reason for the emphasis on former Safeway employees was the result of a market survey by Vons that found “there was great credibility among Safeway shoppers and Safeway employees,” explained Bonnie Baruch, senior vice president with J. Walter Thompson in Los Angeles, which handles Vons’ $15-million broadcast account. “Many shoppers looked at Safeway as a real neighborhood place where they knew the meat guy, the produce guy and the checkout clerk.”
The man they probably now know best, though, is William S. Davila, Vons president and chief operating officer, who is shown in one commercial knocking on neighborhood doors to introduce Vons in Safeway neighborhoods.
And if Davila isn’t reassurance enough, the current Vons commercials and those being planned use the phrase “lowest tape total” and stress a new name, lots of lower prices and the addition to Safeway of USDA choice beef.
“We try to use language that’s familiar to the customer,” said Stuart Rosenthal, Vons’ executive vice president of marketing.
The familiar face and phrase are also a hallmark of competitor Lucky’s advertising. Lucky, whose merger with Alpha Beta is in limbo as a result of the federal court ruling, has steadfastly continued airing commercials featuring spokeswoman Stephanie Edwards and the phrase “low price leader” as it has for several years.
The consistency has brought grudging respect from competitors and industry analysts.
“Some agencies do hot stuff, and it doesn’t sell,” said Miles J. Turpin, chief executive of the Western division of Grey Advertising Inc. in Los Angeles, which has Lucky’s account. “Nobody knows more quickly whether advertising works than a retailer. If the cash register rings, it works.”
Whether the register will continue to ring remains to be seen, but there are indications that the merger controversy may have a short shelf life. Several chains are already planning advertising campaigns with new themes.
Hughes, for example, is planning a “History of Smart Buying” campaign in which low food prices are compared to once being able to buy a Van Gogh painting for $19.
So if you can’t afford the work of an aspiring artist, you can always invest in vegetables.
THE SOUTHLAND’S SUPERMARKET AD WARS
Everywhere you look these days--on television, billboards, radio and in newspaper advertisements--Southern California supermarkets are battling for a bigger share of shoppers’ dollars. The merger of the Vons and Safeway chains and the potential combination of Lucky Stores and Alpha Beta has sent competitors scurrying. At the same time, all the chains are looking for new ways to pitch service, quality and, of course, low prices.
One of the most aggressive TV ads to air in recent weeks has been a Ralphs commercial that shows hundreds of shopping carts barreling down the street on their own. “They’re coming from Vons. They’re coming from Lucky. they’re coming from supermarkets all over Southern California . . . to Ralphs and the Giant,” the announcer intones.
“Have you ever seen a kiwano ? A tamarillo? Me neither,” says Vons produce manager John Kosha, a former Safeway employee, in another TV ad. “We’ve got all kinds of new things in the produce department since we became Vons.” The commercial, like several others, is aimed at reassuring customers that the important things haven’t changed.
