So-called "no-frills" or "no-name" food products are no bargain for consumers, the vice president in charge of groceries at Giant Food charged yesterday.
Directly criticizing the plain-wrapper products recently introduced by rivals Safeway and A&P, Giant executive Gerson Barnett called promotion of the economy products "misleading."
In some cases, the quality of the no-name products is "reduced to the point where the consumer is actually paying more" than for other products, Barnett said.
He also attacked one of the food industry's favorite promotional tools, cents-off coupons, saying they cost food makers far more than they save consumers.
Barnett's comments on coupons came in answer to a stockholder's question, but his criticism of the no-name economy products was part of a carefully prepared presentation for the annual meeting.
Giant, Safeway and A&P are the three largest supermarket chains in the Washington-Baltimore area with more than 60 percent of the business between them. Safeway is number one in Washington, with 33 percent of the market; A&P is the biggest in Baltimore, with 22.5 percent; and Giant is second in each market, but biggest overall, with 24 percent of the total.
Even is such a competitive market, it is unusual for an executive of one food chain to publically criticize the promotional strategy of another as Barnett did in knocking no-name products.
A&P announced last sumer it woud offer about two dozen economy-grade products - from laundry detergent and paper towels to canned corn and peanut butter - with plain white labels featuring black block lettering.
Safeway introduced scotch-plaid-labeled "Thrifty" products a short time later and, like A&P, priced them lower than either band-name products or its own private-label items.
"Claims have been made by the sponsors of these products that the savings to the consumer result from lower packaging costs, no advertising and/or lower quality," Barnett said yesterday.
"Savings for this simple packaging is from insignificant to none," he responded. Advertising costs are actually higher because "more advertising and promotion dollars have been spent by the sponsors of no-name products than they would normally spend on similar private-label products they offer," he said.
The real reasons no-name products sell for less are that the products are of lower quality and the stores that sell them are practicing selective discounting - offering the products as loss leaders to draw customers, Barnett said.
"When you consider lower quality, the perceived value of the lower-quality product is misleading," Barnett charged. "Minimum savings can accrue to the consumer for products that are of lesser satisfaction."
Repeating a theme Giant has used in its advertising. Barnett said the company would match the price cuts by offering lower prices in its own-private-label products, which he said were of higher quality.
Asked by a stockholder about Giant's policy of giving customers twice the discount of manufacturer's coupons, Barnett replied that the practice was "a competitive response.
"I don't like it," he added. "I don't like coupons in general. I don't believe the consumer gets a good return out of coupons."
The Giant executive pointed out that a 5-cents-off coupon costs a manufacturer an additional 7 cents for redemption, and more money for distribution and other costs.
In another development of consumer interest, Giant executive revealed yesterday that the company is eliminating all of its serviced fish departments.
Self-service fish departments with fresh, but pre-packaged, fish will be installed in their place. "There's no way for us to intelligently operate a fish department on a serviced basis; We can't afford it," Giant President Israel Cohen told a shareholder.
The company plans to phase out all the fish departments and to build a new fish cleaning and packaging plant adjacent to its new Jessup grocery warehouse where the annual meeting was held.