COMPARISON ADS PLUG FRED MEYER EDLP

RUSSELL REDMAN

PORTLAND, Ore. -- Fred Meyer Inc. here has stepped up advertising of its everyday-low-price strategy for groceries, according to observers.

In recent weeks, Fred Meyer print ads have urged consumers to compare its grocery prices with those at rival chains. The ads have also encouraged consumers to shop at other stores for specials but to come to Fred Meyer for their everyday supermarket needs.

"They've been picking up media and print ads fairly aggressively in selected markets," especially areas mired in slow economy, such as Seattle, said Brian Suher, a vice president at Piper Jaffray Inc., a Portland-based investment firm.

That has occurred since late May or early June, he said. "They've been trying to differentiate themselves and have put a lot of their advertising money into talking about EDLP strategy vs. other [supermarket chains] that are using coupons or sales."

A Portland-area observer said price-comparison advertising is not new for Fred Meyer but has been sharper lately. "I've seen it before, but not nearly as prevalent as it is today," he explained. "It's fairly new. They're not doing it on a weekly basis, I believe; it's hit and miss."

Two full-page newspaper ads run late last month, for example, listed Fred Meyer's prices on certain beverages and baby products against those at Safeway and Albertson's. Above each product it said "Here's Proof!" to highlight the listed cost savings. Featured items included Snapple, Evian, Gerber baby juices and Johnson & Johnson baby lotion and oil.

Atop the baby ad, it said,

"Double Coupons: They may save you money, but they'll also cost you money." Below that, it explained, "Some stores offer a few double coupons and a few really hot ad specials every week to attract you in. Then they hope you'll also buy enough other higher priced items to make up for their losses on those coupons and ad costs . . . If you have the time, buy those hot specials elsewhere, but then do the rest of your shopping at Fred Meyer, where you know you can save on over 10,000 items every day."

The beverage ad, run for Independence Day, had a "Discovery" coupon for a 24-pack cube of Pepsi or Diet Pepsi. "We use Discovery Coupons to invite in new customers to see for themselves that we do have lower prices overall on products that they buy or need every day," said Curt Lerew, senior vice president and director of the food group at Fred Meyer.

"The concept is that there's no need to shop around from store to store," he explained. The baby ad, he noted, was "designed to combat the double-coupon shopper."

Over the past year, Fred Meyer has run about 20 such full-page ads in Portland, Seattle, Salt Lake City, Alaska and other markets, Lerew said. Spotlighted product categories have included pet food, detergents, pasta and soup, and price-comparison shelf tags saying "Here's Proof!" have supported the advertised items, he said. Fred Meyer's multidepartmental format is the crux of the strategy, Suher noted. "They figure that if they can get their message across, they'll still have people coming for their music department, electronics department, etc.," he said. "And if people know that their food prices are good and competitive, then they'll shop there for food. And they have."