CHICAGO -- By building upon the use of everyday merchandising tools such as signage, endcaps and even parking lots, supermarket retailers can foster a better price image, aiding in the battle with alternate channels, according to Harold C. Lloyd.
Lloyd, former president and CEO of a 14-unit grocery chain and current president of H. Lloyd & Associates, Virginia Beach, Va., offered up tips on exactly how to do this during the seminar "Promoting a More Positive Price Perception" during last week's Food Marketing Institute trade show, held at McCormick Place here.
"When it comes to groceries, customers want competitive prices. Price is not everything, but it's in the top three. You've got to be about price," Lloyd said.
Research has shown that consumers perceive supermarkets to be between 20% and 30% higher in price than other formats that sell food. In fact, Lloyd said, it's much closer to 10%. Lloyd suggests that retailers never let their prices rise above being 10% higher than their competitors in the same store format. Changing a price perception can take up to 36 months for some retailers, he said, but during this time stores should never stop doing what they're really good at, like working closely with the community.
He identified several "windows of opportunity" for retailers that, if used properly, can help foster a low price image, he said.
Advertising focused on price should not be limited to print materials, but can also be applied to store fronts, company vehicles and even cart corrals.
"Wal-Mart is better than all of us when it comes to a positive price perception," Lloyd said.
To drive home his point he showed the audience three slides that represented the store fronts of a Kroger, which said "Open 24 Hours" and "We Sell Food," a Meijer, which only included the store name, and a Wal-Mart with its "We Sell For Less" logo. "I haven't even set foot in the store yet, but right off the bat I'm thinking Wal-Mart is cheaper," Lloyd said.
Having a reference to price in the store's name will help its image among shoppers, he said, referring to stores like ShopRite, the South American Super Price and Price Chopper, forcing the others to work harder at creating that image.
Retailers concerned with their price image should be wary of advertising that promotes themselves in an upscale light because "when you use themes that are diametric to price you are taking a risk," Lloyd cautioned. For examples, he presented print ads for Farm Fresh, which referred to the store as a "World Class Operation"; Larry's, which emphasized "Selection and Quality and Very Competitive Prices"; and Brookshire's with its "Low Prices and Friendly Service."
Additional price-centric advertising opportunities lie in daily "hot sheet" circulars, Web sites, floor graphics and the store intercom, which increased sales at Bassett's IGA Supercenter, Port Clinton, Ohio, by about 10% during the first week in which it ran every five minutes with the phrase "we love to save you money every day" as its conclusion.
First impressions can be cultivated in the store's "presto" area -- which Lloyd defines as the first display a consumer sees when they take three steps into the store. Cub Foods does a great job with signage there, he said, and also by placing the company mission statement at its front doors and by running EDLP banners across its frozen food case.
Handmade signs -- which "look friendlier, fresher and cheaper" -- are other sensible signage strategies, as are "how and why signs" that carry an explanation, such as "the weather has increased produce prices," he said.
Finally, having properly trained employees can make all the difference between a store and its competitor. Lloyd suggests showing employees the store's supplying warehouse so they can appreciate the store's buying power, and also having them price check other stores for comparisons.