The Galveston County Daily News

The fight for the frugal shopper is getting fiercer.

Citing a lingering recession, Randalls Food Market last week announced it would slash prices by up to 25 percent on thousands of items, upping the ante in an increasingly competitive market in which Kroger and H-E-B are taking direct shots at each other in aggressive advertising campaigns.

All are trying to keep increasingly cash-conscious shoppers or to recapture those who’ve defected to deep discounters and formidable mass merchandisers such as Walmart, industry observers said.

Randalls, which had long positioned itself as upscale and had stayed out of the pricing fray by promoting quality and shopping experience, is cutting prices as consumers tighten their grip on grocery dollars, officials said.

The change isn’t a fleeting gimmick but a permanent strategy, Tom Schwilke, president of Safeway Randalls, said.

“We are listening to our customers, who are stretching their dollars further now.”

Randalls, which oper-ates stores in Friendswood, Galveston, League City and the Clear Lake area, is reducing prices across the board, including on ice cream, frozen snacks, pet food, pizza, cheese, salad dressing, yogurt and pasta.

Yellow tags will signal the price reductions. Some prices have been reduced by 25 percent.

Until recently, grocers, including Randalls, invested millions of dollars remodeling and improving the store experience, adding coffee shops, sushi and olive bars.

Although consumers still want perks and amenities, price is at the top of their minds, industry trackers said.

“Price has definitely become more important to consumers in light of the economy,” Mark Hamstra, retail/financial editor of Supermarket News said.

Tricky Manuver

Repositioning as a grocer appealing to cost-conscious consumers won’t be easy, but it’s doable, Hamstra said.

Safeway recently has lowered prices at its Dominick’s chain in Chicago and Vons in California.

“I think they’re starting to see some results from it,” Hamstra said.

Safeway, which operates more than 1,700 stores in North America, on Oct. 15 said earnings were down 15 cents a share from a year earlier for the quarter ended Sept. 12 and revenue declined 7 percent to $9.46 billion. Sales at stores open at least a year fell 3 percent, excluding gasoline sales.

At the time, Safeway said more shoppers were visiting its stores but were spending less.

Despite sales and profits begin down slightly, Safeway is seeing positive trends in the market, officials said. Some shoppers who had been searching for bargains were showing signs of trading up, they said.

Busted Boomers

But the recession and money worries, especially among baby boomers who watched retirement accounts dwindle, still are dramatically shaping consumer patterns, said Mandy Putnam, vice president of TNS Retail Forward and author of the group’s American Shopper Scape, which focuses on consumers and their shopping habits.

Mass merchandisers such as Walmart are benefiting from a shift in spending, Putnam said.

“We’re still seeing about 71 percent of people saying they have significantly or somewhat changed their shopping behavior this year because of the downturn in the economy,” Putnam said.

Consumers are seeking deals and trading down in terms of types of products, are buying more store brands and are foregoing food items they consider too expensive.

Putnam said she didn’t see consumers limbering up on spending any time soon.

“Baby boomers have been hit quite hard in this recession,” she said. “I think people are realizing that shoppers aren’t bouncing back as quickly as anticipated.”

Paying Attention

Randalls has been paying close attention, Schwilke said.

In 1999, Pleasanton, Calif-based Safeway Inc. bought Houston-based Randalls Food Markets, which was owned by the Randall Onstead family.

Randalls Food Markets operates 36 stores in the Houston area, 14 stores in Austin and 62 in the Dallas-Fort Worth area under the Tom Thumb banner.

“The marketplace is as competitive as it has ever been,” Schwilke said. “We are listening to our customers, and we absolutely need to take it to the next level on pricing. We’re doing that with this launch.”