Ralphs Revamps Promotions

ELLIOT ZWIEBACH

COMPTON, Calif. — Ralphs Grocery Co. here, a division of Kroger Co., Cincinnati, introduced “a better way to save” last week to customers at its Southern California stores.

The chain said it was lowering prices on thousands of items, though it will continue to offer in-store and advertised specials; it also said it was introducing a Ralphs Rewards card that will enable customers to earn cash rebates four times a year.

Ralphs also announced a change in its double-coupon policy. Rather than doubling the full value of all coupons, the chain said last week it will double amounts only up to $1; any coupons worth more than 50 cents will be redeemed at $1 but no more.

The programs were installed at 38 Ralphs stores in San Diego County in early May and were extended last week to the remaining 224 Ralphs stores in Southern California.

Industry analysts said Kroger has lowered pricing and offered rewards cards at several other conventional divisions, but held off doing so at Ralphs “because it was trying to regain some of the profits it lost during” the 141-day strike-lockout in Southern California in late 2003 and early 2004.

Ralphs began doubling the value of manufacturer coupons in the mid-1980s — the first chain in Southern California to do so — and some other conventional chains followed. In early 2006, Vons announced it was dropping double coupons altogether in several divisions, including Southern California, but reintroduced the offer a few weeks later due to customer demand.

One observer told SN the change in the double-coupon policy at Ralphs could help Vons, a division of Safeway, Pleasanton, Calif. “Certain customers are very loyal to double coupons — they don't care where they get them — and this move by Ralphs will give Vons an opportunity to reemphasize its own program, which is more generous than the new Ralphs offer.”

Sources also said that besides the change in double-coupon redemptions, Ralphs also plans to phase out senior citizen discounts and programs that allowed customers to qualify for reduced prices — based on prior purchases — on wine and pet supplies.

The announcement of the new programs to Ralphs employees was made by David Dillon, chairman and chief executive officer of Kroger, who spoke to them live via closed-circuit TV last Tuesday. It marked the first time Dillon had spoken live to the division here, observers told SN.

According to Mike Donnelly, president of the Ralphs division, the lower pricing and rewards card programs are a response “to the challenges of today's economy, [in which] more people are looking for ways to save money. With our new lower prices, shoppers will see the difference in their grocery bill when shopping at Ralphs.”

He said Ralphs Rewards is the chain's newest loyalty program. Under it, shoppers will earn one point for every $1 they spend on almost everything in the stores and will receive $5 in rewards certificates for every 500 points they collect, good toward future purchases.

Rewards certificates will be mailed to customers' homes every three months, approximately two months after the end of every quarter. The program offers a maximum payout of $250 per rewards cycle.

Customers with Ralphs Club cards will be able to exchange those cards for Ralphs Rewards cards, the company said.