QUADRUPLE-COUPON FIGHT IN PHOENIX

ELLIOT ZWIEBACH

PHOENIX -- A raging coupon battle among Phoenix-area retailers is reaching new levels of intensity, spurring Safeway and Fry's Food & Drug to take the virtually unprecedented step of offering to quadruple manufacturer coupons.

In a market where most retailers have doubled coupons for years, the situation began to escalate 10 days ago when Smith's Food & Drug Centers, Salt Lake City, joined the fray by doubling its coupon offers.

Two days after Smith's move, Smitty's Super Valu, based here, introduced triples, and a day later Fry's, also based here, did the same. Then, in last Wednesday's morning newspaper ads, Smith's announced triple coupons and Oakland, Calif.-based Safeway raised the stakes by moving from double- to quadruple-value coupons. Later that day, Fry's was sponsoring radio commercials announcing it too was offering quadruple coupons. All chains have set a $1 limit on increasing the coupon values.

"With the $1 limit, the triple [from Smitty's] and quadruple offers are not such a big step up for Smitty's, Fry's and Safeway," a local observer told SN. "That escalation isn't going to cost them as much because they already have the losses built into their shelf prices, but for Smith's the step from face value to doubles and now triples will cost them more because they have to catch up." For example, a coupon with a 40-cent face value will cost a double-coupon chain 40 cents out of pocket and, with a $1 cap, tripling will cost it only 20 cents more. But the same coupon will cost Smith's 60 cents more than it did before it increased the face value.

Debra Albery, public affairs manager here for Safeway, said the chain had made the move to quadruples "because we have lowered prices across the board over the last few months, and we have increased market share. We are very serious about retaining that share."

Smith's officials could not be reached for comment on why they had initiated double coupons -- and now triples -- on top of their everyday-low-price program.

According to a local observer, Smith's launched doubles "because its AdMatch program [in which it matches competitors' ad prices] is three years old and the bloom is gone. In addition, same-store sales are down and Smith's was looking for something to give sales a shot in the arm."

Smith's has been offering double coupons in its Tucson stores since Jan. 1. The program was used to counteract the impact of several Albertson's store openings, the observer said, "and to enable Smith's to get a handle on the costs of a double-coupon program."

When Smith's announced its own triple-coupon program last week, it said the program would be available "for a limited time only" but did not set a deadline. Safeway's quadruple-coupon offer will also expire tomorrow, "and there are no plans to extend it at this time," Albery told SN. Smitty's and Fry's also said their triple offers will expire tomorrow.

Most Phoenix retailers -- Abco, Bashas', Fry's, Safeway and Smitty's -- have been offering double coupons as part of their marketing programs for years. The only exceptions among major chains here were Smith's and Albertson's, which had relied on EDLP as a consumer draw.