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SMITH’S LAUNCHES CAMPAIGN TO CUT PRICES ON 10,000 ITEMS

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"Never again will any supermarket in Utah have lower overall prices than Smith's on meat, produce and grocery."

That's the promise that Smith's Food & Drug Centers Chairman Jeff Smith made Tuesday as some 6,000 Smith's employees gathered at the Salt Palace and six other sites throughout Utah to hear Smith and other company officers announce the company will "meet or beat" its low-price competitors.Smith's launched Wednesday what company spokeswoman Shelley Thomas termed "an aggressive campaign to reduce more than 10,000 prices on meat, produce and grocery items" in the company's 34 Utah stores. The campaign may be extended to stores outside the state at a later date, she said.

The target of the campaign is not Smith's traditional rivals, full-service supermarkets such as Albert-son's and Dan's, but the so-called "box it yourself" discount grocery outlets that have been carving out a widening niche in the local grocery market.

But the company's new low-price campaign is not likely to be ignored by anyone in the grocery business in Utah. Thomas said that employees from other store chains were in Smith's stores early Wednesday checking out the new prices.

"Have the supermarket wars begun? I hate to use that word, but I can't imagine our competitors not responding in some way," said Thomas. "But this is not directed against anyone. We are addressing the fact that the '80s are gone and the '90s are here. The consumer has changed, and the grocery business has changed. We are changing with it."

While the traditional supermarkets have been doing business as usual, a large array of newcomers have been moving into the business, a scenario similar to what banks have faced in the financial-services industry.

"Kmart is building grocery stores, Wal-Mart is in the grocery business and you're seeing discount stores like Food for Less and Store House come in," said Thomas. "We left the door open for the discounters to come in and they did."

Today's consumer, said Thomas, "cares about price first, price second and price third. They still want full service (but) they want it cheap."

Thomas said Smith's management began planning a year ago to meet that challenge by cutting its operating costs everywhere it could. Unprofitable salad bars were eliminated, the floral department was combined with produce, meat cases were cut from four to two, centralized wholesale buying initiated - a broad array of small cost cuts that, in total, resulted in $28 million in annualized savings to the company.

Those savings, she said, will now be passed on to customers.

The program was launched Wednesday with what Ken Findley, vice president of sales and merchandising for Smith's Intermountain Region, said is the most aggressive newspaper, TV, radio and billboard advertising campaign in the company's recent history. The ads feature Smith's employees explaining the cost-cutting measures that fuel the campaign.

In his message to employees, Smith said the decision to meet or beat discount stores' prices is a long-term commitment for the company, not a temporary ad campaign.

Smith also addressed recent rumors that Smith's was about to be acquired by Wal-Mart, American Stores and others. "We are definitely not for sale," he said.

Part of the cost-reduction campaign involved layoffs, but Thomas said the number was exaggerated. "We laid off only nine statewide, and only two are still on layoff." To prepare for the 10,000-items campaign, Thomas said, Smith's has hired 342 people in the past 10 days, mostly for checker and bagger jobs.