Signs of a food price war emerged yesterday as Safeway and A&P promised to match the lower prices announced over the weekend by Giant Food Inc.
Giant cut prices because of savings from a new policy of marking prices only on shelves rather than on each individual item, according to chain officials. But both its main competitors pledged to keep prices on individual items -- at least for the moment -- while making their reductions.
In its promotion, Giant says it is reducing prices on 1,500 to 2,000 items -- about 17 percent of the merchandise in an average supermarket. Chain officials would not say how much the average reductions are or how long the lower prices will remain in effect.
Barry Scher, a public relations spokesman for the chain, did offer some examples of the reductions: a gallon of Giant brand milk, down from $2.09 to $1.89; a 6.5-ounce can of Starkist tuna, down from $1.19 to 84 cents, and a two-pound box of Kraft Velveeta cheese, down from $4.39 to $3.23.
Industry officials said Giant's move is intended to increase sales and profits at its 126 stores and carve out a bigger share of the market, and that is why its competitors responded quickly.
"We are going to lower prices on a considerable number of products," said Ernest G. Moore, a Safeway representative. Moore said the details for the price reductions at the 125 supermarkets operated here by Safeway will be announced later this week.
Safeway and Giant together get about 60 cents of each grocery dollar spent by Washington area consumers. Slightly more than half of that 60 cents is rung up on the Giant cash registers.
Other major chains said yesterday that they are monitoring the price promotions carefully. "We will respond in being competitive with our pricing," said Mike Rourke, a representative of A&P, which has 51 supermarkets in the Washington area. Grand Union officials also said they are watching the skirmishing over prices.
The price reductions made possible by dropping item pricing, Giant officials said, reflect savings in labor costs that accompany the time-consuming chores of marking and remarking thousands of individual food products.
Giant has an advantage in dropping item pricing since all of its stores are equipped with electronic scanning devices that record prices by reading the coded stripes on the packages -- meaning that prices can be changed easily simply by changing the computer listing and the shelf markers.
At present 12 of the 125 local Safeway supermarkets are equipped with such scanning devices. However, the chain also has 35 other stores with electronic registers. Those registers, while less sophisticated, allow the cashier to punch in a special code representing a product. That code then automatically rings up the price on the register. By the end of this year, Safeway expects to have more than half of its supermarkets equipped with either a scanner or an electronic register.
All of the local A&P stores have either electronic registers or scanners.
None of Grand Union's 48 stores here has computerized checkout facilities.
While all three chains promised to retain item pricing as a general rule, Safeway makes one exception -- at its new St. Charles store near Waldorf. That store has shelf prices but not item prices
"It has worked out very well and we intend to give this policy further consideration," said Safeway's Moore. "But there are no immediate plans to take off prices" at stores other than St. Charles.
Consumer leaders blasted Giant yesterday for its item pricing decision and questioned its promises of lower prices.
They have fought to keep prices on individual products on the grounds that it makes comparison shopping easier. They argue that item prices are easier to follow at the checkout counter and also allow consumers to track more closely price increases as new groceries are stored in the pantry and refrigerator next to products purchased earlier.
"We are flabbergasted that Giant could take such an outrageous action . . .
and so mistake the feeling of consumers," said Charlotte Newton, the chairman of the consumer coalition that has opposed shelf pricing and unsuccessfully sought legislation to make item pricing mandatory. The coalition consists of 10 organizations, including local and national groups such as the Consumer Federation of America and the National Consumers League.
"We are mobilizing. We don't intend to let this go by," Newton said. Plans will be announced within the next several days for what she said will be a "symbolic protest to allow consumers to voice their displeasure with what Giant has done."
One Virginia consumer leader, Barbara Bitters, resigned from the Giant consumer advisory board yesterday as a protest against the chain's item pricing decision.
Newton also predicted that the Giant price cuts are a short-term phenomenon:
"How long will we have these [price] cuts? How long before we are back to higher prices. In three months, if their profits are down, the prices will go up again."
One industry official, describing Giant's reasons for its new policy, said, "Sales have been softer for everyone, partly because of the way the economy has been going. People have been buying less convenience foods and more basics and staples -- and that reduces a store's profits.
"For example, if people suddenly trade down from a 50-cent can of food to a 35-cent can of food, the profits [probably] go down."
One way to increase profits is to increase volume, the official said.
Sponsoring a special promotion can help do that, he said. And, in a roundabout way, so can elimination of item pricing, he said. Clerks freed from stamping prices on each item can be assigned to other duties such as keeping shelves fully stocked or manning checkout stands. That can improve customer service and assure a larger selection of goods for shoppers to choose from. Concluded the supermarket official:
"The fuller the inventory and the better the service they get, the more they will buy."