Giant Food yesterday unveiled its answer to low-price, low-frills food outlets and said the way to reduce the operating costs of supermarkets -- and cut food prices -- is not to reduce the selection or limit the frills but to stop marking prices on every item.
Giant's "Warehouse Values" store in suburban Clinton stocks only two-thirds the number of items of a conventional supermarket and displays goods in their shipping cartons, much like the "limited assortment" stores recently opened by other food chains.
But Giant Chairman Israel Cohen said the main way the new store will cut its costs is to stop marking the price on every bottle, can and box, a step that promises to prove controversial wiith consumers.
With computerized checkouts that read prices off a striped panel on each package and are more accurate than human checkers, there's no need to stamp the price on every item, just on the shelves, Cohen said at a press preview of the store, which opens today.
Calling price marking "a tremendous labor cost that adds nothing to the intrinsic value of the item," Cohen said, "We're got to convince the shopper that it's not necessary."
Ever since supermarkets began installing the scanners that ring up prices by reading the Universal Product Code panel on packages and drawing the latest prices from its memory banks, consumer activists have complained that the stores want to stop marking the prices on the goods.
Giant took the lead in computerizing its checkouts and more than a year ago became the first chain in the nation to put the scanners in every store. Now the Washington supermarket chain apparently is willing to lead the industry in eliminating price marking, with the promise that it will hold down food costs.
A special code reader in the new store will enable consumers to check prices before they get to the checkout counter.
While Giant's policy until now has been to mark prices on each package, the chain has quietly experimented with leaving off the price tags and found that in most cases consumers don't even n notice, food industry sources said.
Cohen said any money Giant can save by not marking prices on items "will be reflected in the prices" consumers pay, but he would not estimate how much lower Giant's prices will be in the new type of store.
Officially Giant is calliing the ventur "a test store," but Cohen said, "we believe this is the store of the future." Another just like it is under constuction in Waldorf and will open next month, and two more are being built in the Baltimore area.
If the changes are as successful as Giant executives predict, all the rest of the company's 123 supermarkets can quickly be converted to the same concept, the Giant chief executive said.
The most apparent difference in the new version are rack-type shelves in which most items are stocked in their shipping cases with the ends or sides cut off. Small items -- like canned tuna -- are dumped into wire bins. Soft drinks are on wheeled racks that can be filled in the back room and rolled into the aisles.
Most of the reduction has been made by cutting the number of sizes of each item.
The cutbacks in the number of items have the potential for major reductions in the inventory cost of food stores, Cohen explained. If the company can get by with one-third fewer items, it can slash the amount of money required to stock inventory in both the stores and the central warehouse. m
By eliminating the slowest-selling items, the company also hopes to speed the turnover of goods in the stores.