Sweetbay targets Publix in price war

Grocery giants may heavily advertise their short-term sales, like buy-one, get-one free deals each week. But officials at Sweetbay would like to offer what they say is a killer counter-argument.

Sweetbay is cheaper many other times.

Cheaper on cranberry juice. On Chef Boyardee, Bush's baked beans, Oreos and even Prilosec heartburn tablets.

That's the driving force behind perhaps Sweetbay's largest advertising and promotions campaign since the company overhauled itself five years ago and left behind the legacy of its former identity, Kash n' Karry.

It's not a change in strategy. Rather, Sweetbay officials are turning up the volume on their marketing, and calling out their biggest rival, Publix, on a rotating list of more than 700 items in the store, and pointing out where Sweetbay has lower prices.

"BOGO deals may cost less every once in a while," said Geoff Waldau, vice president of merchandizing for Sweetbay Supermarkets. "But we're saying that if customers shop with us over time, they'll save week-in, week-out on the things they actually want to buy."

Case in point: A list of about 15 specific items that Sweetbay highlighted this week cost $22.83, but $26.61 at Publix and $29.74 at Winn-Dixie. A larger list of more than 60 items cost $172.50, $196.71 at Publix and $204.29 at Winn-Dixie.

And perhaps showing Sweetbay isn't afraid to go toe-to-toe with rivals, Sweetbay's lists also show where those rivals have lower prices.

Rival Strategy

Sweetbay's price war highlights the difference between two distinct strategies in the grocery world.

On one side are stores with an "Everyday Low Price" strategy of setting the lowest price they can on a given product, and keeping that price stable anywhere from 13 weeks to a year. There may occasionally be coupons or discounts, but generally stores like Walmart and Sweetbay choose this strategy.

On the other side are "High/Low" stores that offer periodic deals and discounts. Prices may generally stay somewhat stable on a given product, but the store often uses major sales to drive foot traffic: 25-percent off deals or even buy-one, get-one free promotions. Publix often uses strategies like those, and puts about 40 items on BOGO sale each week.

In both cases, a manufacturer's coupon can deepen the discounts. And perishable items in the deli and produce section generally play by a different rule book because seasonality and weather affect prices so quickly.

The difference between those strategies plays out over time. The Tampa Tribune's Market Basket tracks 30 specific items each week. Over the last 42 weeks, Sweetbay's prices stay relatively stable, and total between $65 and $74, while Publix's total varies widely between $65 and $82, but generally above $74. (The Publix total does not count a BOGO item as half off because buying one item still costs the full price.)

Project List

To be sure, shoppers who diligently chase deals, discounts and coupons can save significantly on their grocery bill. They can either wait until their favorite pasta sauce goes on sale, or they can buy whatever pasta sauce is on a BOGO sale that week, because, for them, price matters most.

Sweetbay officials like Waldau would like to counter with this point: Instead of only chasing discounts, why not shop at their store each week, buy what you want, and you'll save as much or more off your total bill over time.

The project has taken over much of Sweetbay's total advertising drive, with billboards, print ads and Internet marketing.

To quantify the price differences, Sweetbay is doing its own price checks on about 750 items across the store, comparing them to Publix and Winn-Dixie each month. Recently, they began heavy marketing of those results, posting them on a special website, TakeBackYourList.com.

For instance: Sweetbay compared prices on July 10, and found Ocean Spray cranberry juice cost $2.50 at Sweetbay, $2.95 at Publix and $3.99 at Winn-Dixie. Hamburger Helper cost $1.50 at Sweetbay, $1.59 at Publix and $2 at Winn-Dixie. Bertolli Alfredo pasta sauce, $1.99 at Sweetbay, $2.95 at Publix and $2.99 at Winn-Dixie.

To be fair, Sweetbay also shows where Publix costs less that week, for instance Angel Soft Double Roll bath tissue, Doritos and Puffs facial tissues. Though, Sweetbay does not compare its prices to Walmart, which is fast growing its own grocery departments. Nearly every week, Walmart has the lowest-price Market Basket total in the Tribune's survey.

Publix officials say such comparisons aren't necessarily fair, as they note Publix may have lowered prices on a given item by the time Sweetbay advertises the difference. What's more, they say Sweetbay may be "cherry picking," because a given store may have 60,000 items, not just 750.

And Publix officials counter with several of their own items where Publix is cheaper on Sweetbay's own list as of July 20: 7-UP, Breakstone's sour cream, Ken's salad dressing and Arnold whole wheat bread.

Customers "find great value in our weekly sales, get excited about our BOGO items," said spokeswoman Shannon Patten, "and genuinely appreciate saving money on the items they use most."

Price check

Data from The Tampa Tribune Market Basket of 30 items appears to bear out Sweetbay's argument on select items over time.

An 18-ounce package of Oreo cookies was $2.99 or less at Sweetbay for the last 42 weeks (Since the inception of the Market Basket). At Publix, those Oreos cost $2.99 for 15 weeks, but $3.19 for the other 27 weeks. Sweetbay's price also beat or matched Walmart's price for that time as well.

With Campbell's cream of mushroom soup, Sweetbay kept the price at $1 per can for 32 weeks. Comparatively, Publix kept a price of $1.66 per can for 29 weeks, $1.50 for 3 weeks, and $1 or less for 9 weeks. Walmart's price was $1.14 for 31 weeks, and 93 cents or less for 10 weeks.

Hamburger Helper cost $1.50 at Sweetbay for 38 weeks, the same as Walmart, while Publix's price was $1.59 for all but three weeks.

Risks

For Sweetbay, the risks of such a provocative campaign resemble those of the little guy picking on the market dominator. Sweetbay has just 104 stores, compared to Publix with more than 1,000 nationwide.

Meanwhile, Publix is consolidating that dominance with the purchase of about a dozen Albertsons stores in the area. And both Target and the retail giant Walmart are quickly expanding their grocery departments to edge more into the food business.

"Sweetbay is trying to communicate value, which is extremely important now," said Bob Goldin, executive vice president at the food industry research firm Technomic Inc.

There will be shoppers who happily drive across town, or buy brands they might not prefer, just to save a few dollars, he said. And amid a tough recession, Sweetbay may have an uphill battle convincing those shoppers that Sweetbay offers lower prices over time. But if Sweetbay is going to stick with relatively long, stable prices, they'll have to advertise them as heavily as possible.

As for success of the new campaign, Sweetbay officials decline to say how much it's boosting revenue, if any. But they do say it's doing well enough to keep the project going.

That makes sense, Goldin said. "The consumer is so very price conscious now," Goldin said, "I think they have to do it."