very first city in Connecticut — where Wal- Mart is a very small factor — that local super- markets have been prepared to so completely be undersold by Wal-Mart. If we look at the deal available to all con- sumers who walk in the door, our 46-item Wal-Mart Pricing Report (RoundV) market basket shows that Safeway charges over 36 percent more than Wal-Mart; Albert- son’s charges in excess of 30 percent more than Wal-Mart; Haggen’s comes in at over 26 percent more expensive than Wal-Mart; and , ’s acquired supercenter- Benign Indifference like concept, is still overpricing Wal-Mart by almost 23 percent. That Fred Meyer is content to be seen as so expensive compared to Wal-Mart is a con- firmation of our experience in South Florida, in Portland, Oregon where we included a Super Target in our study. In fact, Super Target priced almost BYJIMPREVOR identically to Fred Meyer — 22 percent over Like Balboa inching his way toward the Pacific, the local Wal-Mart Supercenter. Prior to these studies, we considered the this month PRODUCE BUSINESS brings its Wal-Mart possibility that there was something intrinsic Pricing Report series — in which we analyze how to the supercenter format that allowed it to price produce very inexpensively. Some theo- local retailers are pricing produce items compared rized that a supercenter concept, by its very to Wal-Mart Supercenters — to Portland, Oregon. nature as a purveyor of high-margin general merchandise, would benefit if perishables Since we started our Wal-Mart Pricing Report study were priced inexpensively, so as to draw more in Connecticut and continued our journey to Utah, frequent visits by consumers. These con- Florida and Texas, this month’s study in Portland, Ore- sumers, attracted by cheap prices on perish- gon, means we have crossed the whole continent and ables, would buy high-margin general mer- now ask the question: Do retailers on the West Coast chandise while in the supercenter. have a distinct pricing strategy for dealing with Wal- But this theory, if true, seems to be Mart? recognized only by Wal-Mart, as neither If they have one, it might be called benign indiffer- Super Target nor Fred Meyer seem ence, since the competitors — Albertson’s, Safeway, interested in providing any particularly Fred Meyer and Haggen’s — are simply blasted away great deals on produce. by Wal-Mart’s pricing. In fact, it hasn’t been since our Portland is a good market to check out another theory — that may price high to the general public, who just How They Stack Up Against Wal-Mart Supercenter drop in because of convenience, but per- haps they offer exceptional value to mem- % over % over % over bers of their own frequent shopper or loy- Region Store Wal-Mart Store Wal-Mart Store Wal-Mart alty programs. Alas, for those rooting for the supermar- Connecticut Super Stop & Shop ...... 23% Shaws ...... 34% ...... 36% kets, although loyalty programs do provide Salt Lake City Harmon’s ...... 2% Smith’s ...... 6% Albertson’s ...... 12% significant discounts on produce, the pro- grams are nowhere near substantial enough South Florida Super Target ...... 22% ...... 31% Winn-Dixie ...... 52% to overcome Wal-Mart’s formidable edge. Dallas, Texas Albertson’s ...... 23% Brookshires ...... 7% Kroger ...... 19% Albertson’s, Haggen’s and Safeway all Neighborhood Market . . . .-1.2% Tom Thumb ...... 27% have loyalty card programs, but even after these discounts are applied, Wal-Mart still Portland, OR Albertson’s ...... 30% Fred Meyer ...... 22% Haggen’s ...... 27% beats Albertson’s by 22.22 percent, Haggen’s Safeway ...... 37%

REPRINTED FROM PRODUCE BUSINESS • MARCH 2004 / 1 Wal-Mart Supercenter vs. 4 Chains — Price Comparison — Portland, Oregon Prices Available to the General Public

Produce Item Wal-Mart Albertson’s % Over Fred Meyer % Over Haggen’s % Over Safeway % Over Superstore Wal-Mart Wal-Mart Wal-Mart Wal-Mart Apples - Granny Smith, Small $0.64 $1.29 101.56% $1.29 101.56% $1.29 101.56% $1.59 148.44% Apples - Red Delicious, Large $0.97 $0.99 2.06% $0.89 -8.25% $0.99 2.06% $1.39 43.30% Asparagus - Bulk $2.93 $3.99 36.18% $3.99 36.18% $3.99 36.18% $3.99 36.18% Bananas - Yellow $0.48 $0.79 64.58% $0.69 43.75% $0.69 43.75% $0.79 64.58% Beets - Bulk $1.84 $1.99 8.15% $1.99 8.15% $1.99 8.15% $1.99 8.15% Broccoli - Bulk $1.34 $1.99 48.51% $1.89 41.04% $1.69 26.12% $1.99 48.51% Cabbage - Green, Bulk $0.33 $0.69 109.09% $0.59 78.79% $0.69 109.09% $0.59 78.79% Cabbage - Red, Bulk $0.63 $0.89 41.27% $0.69 9.52% $0.69 9.52% $0.79 25.40% Cantaloupe - Whole, Bulk $0.68 $0.99 45.59% $0.89 30.88% $0.99 45.59% $0.99 45.59% Carrots - Bulk $0.58 $0.79 36.21% $0.69 18.97% $0.99 70.69% $0.75 29.31% Celery - Bulk $0.88 $0.99 12.50% $0.79 -10.23% $0.59 -32.95% $0.89 1.14% Cucumbers - Regular $0.50 $0.89 78.00% $0.79 58.00% $0.69 38.00% $0.89 78.00% Dressing $2.68 $3.59 33.96% $2.49 -7.09% $2.99 11.57% $3.99 48.88% Eggplant - Each $1.23 $1.69 37.40% $1.50 21.95% $0.69 -43.90% $1.29 4.88% Garlic - Each $0.31 $0.50 61.29% $0.34 9.68% $0.50 61.29% $0.50 61.29% Grapefruit - Red, Each $0.47 $0.69 46.81% $0.50 6.38% $0.69 46.81% $0.79 68.09% Grapes - Red Seedless $2.37 $2.99 26.16% $2.99 26.16% $3.49 47.26% $2.99 26.16% Green Onions $0.47 $0.79 68.09% $0.59 25.53% $0.69 46.81% $0.49 4.26% Honeydew - Whole, Bulk $0.59 $0.99 67.80% $0.89 50.85% $0.79 33.90% $0.99 67.80% Kale - Bunch $0.94 $0.89 -5.32% $1.29 37.23% $1.19 26.60% $1.19 26.60% Lemons - Each $0.20 $0.79 295.00% $0.59 195.00% $0.99 395.00% $0.39 95.00% Lettuce - Green Leaf Each $0.98 $1.49 52.04% $1.49 52.04% $1.39 41.84% $1.99 103.06% Lettuce - Iceberg Each $0.98 $1.49 52.04% $1.29 31.63% $1.91 94.90% $1.49 52.04% Lettuce - Red Leaf Each $0.98 $1.49 52.04% $1.49 52.04% $1.39 41.84% $1.99 103.06% Lettuce - Romaine Each $0.98 $1.69 72.45% $1.79 82.65% $1.69 72.45% $1.79 82.65% Limes - Each $0.25 $0.25 0.00% $0.34 36.00% $0.29 16.00% $0.39 56.00% Mangoes - Each $1.17 $1.49 27.35% $0.99 -15.38% $1.00 -14.53% $1.29 10.26% Mushrooms - White Bulk $2.96 $3.69 24.66% $2.49 -7.09% $3.29 11.15% $2.99 1.01% Mushrooms - White Package $2.68 $1.99 -25.75% $1.99 -25.75% $2.99 11.57% $1.99 -25.75% Onions - Red $0.88 $0.99 12.50% $0.89 1.14% $0.99 12.50% $0.99 12.50% Onions - Yellow $0.68 $0.79 16.18% $0.49 -27.94% $0.59 -13.24% $0.89 30.88% Pears, Bartlett $1.14 $1.49 30.70% $0.99 -13.16% $0.69 -39.47% $1.39 21.93% Peppers - Green Bell, Each $0.50 $0.69 38.00% $0.79 58.00% $0.79 58.00% $0.79 58.00% Peppers - Red, Each $1.50 $1.29 -14.00% $1.99 32.67% $1.99 32.67% $1.69 12.67% Pistachios - Bag $3.47 $3.99 14.99% $4.89 40.92% $4.52 30.26% $4.99 43.80% Potatoes - Red Bulk $0.57 $0.79 38.60% $0.79 38.60% $0.89 56.14% $0.79 38.60% Potatoes - Russet Bulk $0.50 $0.79 58.00% $0.59 18.00% $0.69 38.00% $0.59 18.00% Radishes, Bunch $0.38 $0.79 107.89% $0.79 107.89% $0.69 81.58% $0.49 28.95% Raspberries $2.57 $3.99 55.25% $3.99 55.25% $3.99 55.25% $4.49 74.71% Spinach - Bunch $0.94 $1.49 58.51% $1.49 58.51% $1.19 26.60% $1.59 69.15% Squash - Zucchini, Bulk $1.32 $1.49 12.88% $1.29 -2.27% $1.49 12.88% $1.29 -2.27% Tangerines - Bulk $1.25 $1.29 3.20% $1.29 3.20% $1.29 3.20% $1.79 43.20% Tomatoes - Grape $2.62 $2.99 14.12% $2.99 14.12% $2.99 14.12% $3.99 52.29% Tomatoes - Plum/Roma $1.34 $1.99 48.51% $1.99 48.51% $1.79 33.58% $1.99 48.51% Turnips, Bulk $0.88 $0.79 -10.23% $0.99 12.50% $0.99 12.50% $0.89 1.14% Yams, Bulk $0.88 $1.29 46.59% $0.99 12.50% $0.99 12.50% $1.29 46.59% Market Basket Total $53.46 $69.71 30.40% $65.46 22.39% $67.81 26.84% $73.11 36.76% Source: U.S. Marketing Services by 23.20 percent and Safeway by 29.15 per- phenomenal edge on pricing. Why? cost basis to their operations, or they don’t cent. Surely these chains realize that they are want to give up the margins and are content So, if the price points aren’t competitive placing their businesses at risk in the long to simply get what profits they can, while to the general public and they aren’t com- run by allowing a competitor to seize the they can. petitive to the loyalty program members, we reputation as always providing the best In any case, the future may not be come to the conclusion that supermarkets value. So, either the chains can’t be competi- so benign for competitors who can’t — in Portland are prepared to give Wal-Mart a tive because they have a structurally higher or won’t — compete. pb

REPRINTED FROM PRODUCE BUSINESS • MARCH 2004 / 2 Wal-Mart Supercenter vs. 4 Chains Price Comparison — Portland, Oregon Loyalty Cardholder Prices

Produce Item Wal-Mart Albertson’s % Over Fred Meyer % Over Haggen’s % Over Safeway % Over Superstore Wal-Mart Wal-Mart Wal-Mart Wal-Mart Apples - Granny Smith, Small $0.64 $1.29 32.99% $1.29 32.99% $0.89 -8.25% $1.59 63.92% Beets - Bulk $1.84 $0.99 -46.20% $1.99 8.15% $1.99 8.15% $1.99 8.15% Cabbage - Green, Bulk $0.33 $0.69 109.09% $0.59 78.79% $0.69 109.09% $0.49 48.48% Cucumbers - Regular $0.50 $0.89 78.00% $0.79 58.00% $0.25 -50.00% $0.59 18.00% Grapefruit - Red, Each $0.47 $0.69 46.81% $0.50 6.38% $0.69 46.81% $0.16 -65.96% Kale - Bunch $0.94 $0.89 -5.32% $1.29 37.23% $1.19 26.60% $0.79 -15.96% Lemons - Each $0.20 $0.79 295.00% $0.59 195.00% $0.99 395.00% $0.33 65.00% Lettuce - Iceberg Each $0.98 $1.00 2.04% $1.29 31.63% $1.91 94.90% $1.49 52.04% Limes - Each $0.25 $0.25 0.00% $0.34 36.00% $0.29 16.00% $0.33 32.00% Mangoes - Each $1.17 $1.00 -14.53% $0.99 -15.38% $1.00 -14.53% $0.99 -15.38% Onions - Yellow $0.68 $0.79 16.18% $0.49 -27.94% $0.59 -13.24% $0.50 -26.47% Pears, Bartlett $1.14 $1.00 -12.28% $0.99 -13.16% $0.69 -39.47% $1.39 21.93% Peppers - Green Bell, Each $0.50 $0.69 38.00% $0.79 58.00% $0.79 58.00% $0.69 38.00% Pistachios - Bag $3.47 $2.99 -13.83% $4.89 40.92% $4.52 30.26% $3.99 14.99% Squash - Zucchini, Bulk $1.32 $1.49 12.88% $1.29 -2.27% $1.49 12.88% $0.99 -25.00% Tangerines - Bulk $1.25 $1.29 3.20% $1.29 3.20% $0.79 -36.80% $1.79 43.20% Tomatoes - Plum/Roma $1.34 $1.49 11.19% $1.99 48.51% $1.79 33.58% $1.99 48.51% Yams, Bulk $0.88 $1.29 46.59% $0.99 12.50% $0.79 -10.23% $1.29 46.59%

Source: U.S. Marketing Services Market Basket Total * $53.46 $65.74 22.22% $65.46 22.39% $66.27 23.20% $69.47 29.15%

* This market basket includes both the above-listed items, which were offered at a discount to loyalty cardholders, plus the other items featured in the chart on page 22, which were not being discounted.

ANOTHERCONCEPT:TRADERJOE’S

In many cases today, the threat to supermarkets comes Because Trader Joe’s carries a minimal assortment, we devel- not from other supermarkets but from other concepts — be oped a smaller 14-item basket for this comparison. Although it supercenters, warehouse clubs or food sections in non-tra- more pricey than Wal-Mart, and slightly more than the other ditional food outlets, such as drug stores. While we were in local supercenter concept, Fred Meyer, Trader Joe’s did manage Portland, we decided to visit a Trader Joe’s to see how this to out-price Albertson’s, Haggen’s and Safeway, thus proving that fast-growing but distinctive format of mostly private label these chains are quick to surrender when it comes to allowing gourmet foods is stacking up on produce pricing. other concepts to claim the low price leader title. pb

Wal-Mart Supercenter vs.Trader Joe’s and 4 other chains

Produce Item Wal-Mart Trader % Over Albertson’s % Over Fred % Over Haggen’s % Over Safeway % Over Superstore Joe’s Wal-Mart Wal-Mart Meyer Wal-Mart Wal-Mart Wal-Mart Bananas - Yellow $0.48 $0.19 -60.42% $0.79 64.58% $0.69 43.75% $0.69 43.75% $0.79 64.58% Cantaloupe - Whole, Bulk $0.68 $0.49 -27.94% $0.99 45.59% $0.89 30.88% $0.99 45.59% $0.99 45.59% Dressing $2.68 $2.99 11.57% $3.59 33.96% $2.49 -7.09% $2.99 11.57% $3.99 48.88% Garlic - Each $0.31 $0.64 106.45% $0.50 61.29% $0.34 9.68% $0.50 61.29% $0.50 61.29% Grapefruit - Red, Each $0.47 $0.69 46.81% $0.69 46.81% $0.50 6.38% $0.69 46.81% $0.79 68.09% Grapes - Red Seedless $2.37 $2.39 0.84% $2.99 26.16% $2.99 26.16% $3.49 47.26% $2.99 26.16% Green Onions $0.47 $1.09 131.91% $0.79 68.09% $0.59 25.53% $0.69 46.81% $0.49 4.26% Honeydew - Whole, Bulk $0.59 $0.49 -16.95% $0.99 67.80% $0.89 50.85% $0.79 33.90% $0.99 67.80% Mushrooms - White Package $2.68 $2.89 7.84% $1.99 -25.75% $1.99 -25.75% $2.99 11.57% $1.99 -25.75% Onions - Red $0.88 $0.99 12.50% $0.99 12.50% $0.89 1.14% $0.99 12.50% $0.99 12.50% Peppers - Red, Each $1.50 $1.79 19.33% $1.29 -14.00% $1.99 32.67% $1.99 32.67% $1.69 12.67% Tomatoes - Plum/Roma $1.34 $2.29 70.90% $1.99 48.51% $1.99 48.51% $1.79 33.58% $1.99 48.51%

Source: U.S. Marketing Services Yams, Bulk $0.88 $0.89 1.14% $1.29 46.59% $0.99 12.50% $0.99 12.50% $1.29 46.59%

REPRINTED FROM PRODUCE BUSINESS • MARCH 2004 / 3