If you could save up to 30 per cent on many groceries you buy, would you be willing to bag them yourself? For the same saving would you buy ungraded, unbranded, plain-packaged groceries? Would it bother you if the prices were not marked on the individual items? Suppose the store didn't stock foods that require refrigeration and left all the goods in the boxes in which they were shipped? Suppose you couldn't get a check cashed or shop on Sundays or late at night?
These are questions being asked here and in several other cities around the country as two new concepts in supermarketing unfold: discounting and "no-name brands." The entire industry is watching and, depending on consumer response, the future of supermarketing in this country may change. Discounting has been described by one of its pioneers as "the first new method of distribution since supermarkets were introduced in the '30s."
Aldi Discount Foods, owned by Aldi-Benner, a West German-American firm, operates approximately 50 discount stores in the Chicago suburbs, in St. Louis and in Iowa. They are reported to be quite similar to the 1,200 stores operated throughtout Europe by the West German part of the firm, Aldi. (It stands for ALI Discount - all items all the time.) The first store in this country was opened in April, 1976 in Burlington, Iowa.
As soon as you walk into the Aldi store in the Chicago suburb of Franklin Park, you know you are not in a typical supermarket. For one thing, it is far too small. For another, it is not overwhelmingly bright. There is no wood veneer, no recorded music, no enticing displays. The few signs appear to have been hand painted.
Near the door shoppers find a yellow sheet. It contains a price list of the 400-plus nonperishable items stocked in the store, complete with unit pricing and a blank for filling in "last price you paid," and tells you that checks are not accepted. People are bagging their own groceries, either in leftover boxes or in their own bags. The store provides no bags.
In order to keep costs down, Aldi does not mark prices on individual items. The pricing sheet is available and large signs over each item give the price and unit price, which sometimes include comparison information: "Cake Mix - Aldi-Benner's answer to Betty Crocker - save 40 per cent." A conflict with price marking laws in the city of Chicago itself and other locations prevents the Aldi stores from opening there.
In addition to the canned and packaged goods, most of which are packed under the Aldi-Bennr label, those who shop in Aldi can buy only four perishable items: margarine, bread, potatoes and onion. There is a reason for the exceptoins to the house-brand labels. According to the company president. Charles Fitzmorris, "If we can duplicate the quality of nationally advertised brands we do so. But, for instance, we are unable to duplicate Hershey's chocolate syrup, so we sell it."
Whether or not discount food stores are a wave of the future depends on the volume of business, on how much convenience people will sacrifice to save money. An informal survey on a recent visit showed those who were shopping in Aldi thought it was worthwhile. One of the shoppers makes a 36-mile round-trip drive to shop at the store. She thinks the "quality is just as good and a lot cheaper than Jewel," a very large supermarket chain that has an oversized supermarket only a two-minute walk from the Aldi store.
Another shopper said, "You can save a lot, but you have to know what you're buying. I can come in here and be out in five minutes." Then she goes around thecorner to the Jewel store to do the rest of her shopping. She said there are three of Aldi's products that she will not buy because she does not like them: tuna, mayonnaise and bread. A taste test of those items, along with several others packed under the company's opinion of the tuna. But the four tasters felt the other products were quite similar to nationally-advertised brands in taste and quality.
Aldi's prices are significantly lower than the nationally-advertised brands. They also are lower than many Jewel house brands. Aldi's five-pound bag of flour is 43 cents. Jewel's is 61 cents and Pillsbury's is 83 cents.
The Aldi store also is cheaper on brand-name items: Sunmaid raisins were 59 cents at Aldi, 75 cents at Jewel; Campbell's chicken-noodle soup is 19 cents at Aldi, 22 cents at Jewel.
Is the discounting concept successful? Fitzmorris said it is "really too soon to tell," but the company has plans to expand all over the Midwest. Jewel has its own discount store in Tampa, Fla., and there are discount operations in several other cities. In St. Louis they have sparked a price war. "The position of the industry," according to Fitzmorris, "is that it's a failure. They don't think I'm doing enough business to make it pay."
But one industry official thinks the concept is working. He said: "I suspect they are so successful Fitzmorris doesn't want anyone else to know."
Robert Aders, president of the industry's trade association, Food Marketing Institute, agrees it's too soon to tell. And he thinks its too soon to make any judgments about "generic brands," the other new concept.
The idea, like discounting, comes from Europe. It is called produits libres (products free of advertising) in France, where it has been extremely successful. Jewel is testing "generic brands" in Chicago and Milwaukee, and Star Market Company of Boston, owned by Jewel, is doing the same thing, calling it "no-name products."
Jewel refuses to discuss its experiment with generics because "it will ruin our testing." The stores involved carry between 40 and 50 boxed and canned items in plain wrappers that cost less than their house-brand items. They are either the same price or a few cents more than similar items at the Aldi Discount Store.
The low prices at Jewel are possible because the quality is below that of the house brands and is not a consistent grade. The wrapper tells the shopper very little about the product beyond these essentials: ingredients, net weight and distributor. The tuna does carry the seal "packed under federal inspection," the macaroni-and-cheese dinner has nutrition labeling and the grapefruit sections are described as "broken".
The label itself is white with black lettering and decorated with only a wide green stipe next to a thinner black stripe. One industry official suggested that the "army-surplus" look to the labels is intended to be in keeping with their low-cost image.
Other cost-cutting efforts at Jewel include keeping perfume out of paper products, packing fruits in light instead of heavy syrup and eliminating the pull tab from the soda cans.
According to a news story in August, only 13 of Jewel's 190 Chicago-area stores have the generic brands. Fitzmorris of Aldi said the generics were only being put in stores where Aldi is in direct competition. Jewel has no comment.
A company official at the store, who asked not to be identified, said, "The price is supposed to match Aldi's. The generic items are selling 30 to 40 per cent better than name brands but not that much better than house brands."
Alders of Food Marketing Institute says generics "may have a potential for products that are pretty much the same." These include sugar, canned fruits and vegetables graded by the government." As you see more disclosure of nutritional content, drained weight, grades - things other than the name that tend to make products trustworthy - there may be more movement toward generics. But we'll probably never get away from brands, because most consumers think they can distinguish the difference."
Even though Jewel would not disclose any information about its trial program, the company spokesman did predict "a major announcement in a couple of weeks." Failures tend to just fade away without fanfare.
Whatever the result in Chicago, these efforts to reduce food prices won't be tried in Washington for awhile. Spokesman for Giant, Safeaway and A&P said there are no plans to introduce either generics or discounting here.
There does appear to be interest in cost-cutting measures among shoppers. In a Food Marketing Institute study last year 78 per cent of those surveyed felt too much fancy packaging of food contributes to high cost.