It’s good news, bad news for Kroger shoppers in southwestern Ohio and northern Kentucky. The grocery chain announced this morning that it’s introducing to the area its “New! Lower Prices” campaign that it first rolled out in Hampton Roads, Virginia last July. Unfortunately, it’s also introducing to the area its no-more-doubling-coupons policy that it rolled out in Texas back in 2011, and that another supermarket chain implemented just one day earlier (read: “The Death of Doubles?”).
The lower prices will be introduced on about 3,500 individual items this coming Monday, with the start of Cincinnati and Dayton-area stores’ new weekly circular. The company held a news conference at a Newport, Kentucky store, to unveil signs and ads that promote the lower prices. “We know price continues to be a top, and at times a deciding, factor when it comes to where to grocery shop,” a Kroger executive said in a news release. “The savings shoppers see on items they buy every week are going to be better.” The company says it’s investing several million dollars in the permanent price cuts.
And all that money has to come from somewhere. So beginning March 1, those same Kroger stores will no longer double coupons. All manufacturer’s coupons will be accepted at face value only. “Savings from the discontinued program will be reinvested into lowering even more everyday prices,” Kroger says. It’s the first time in two years that Kroger has discontinued doubling, though it’s become something of a troubling trend among grocery stores lately (read: “Double Coupons: Dying Like Dinosaurs?”).
Kroger’s move to eliminate doubling in Houston, and then in Dallas, generated an outcry from customers, and the birth of a website called BringBackDoubles.com which, two years later, is still active. At the time, Kroger said its decision was made in order to offer savings that more people could benefit from, since it claimed few shoppers were taking advantage of double and triple coupons. “With the growing popularity of digital coupons, with more people using mobile applications, as well as manufacturers issuing coupons for over 50 cents,” spokesperson Rebecca King explained to Houston’s KTRK-TV, “we felt it was time to try new savings programs and discontinue double, triple programs.”
Unlike that situation, where Kroger only vaguely hinted at new savings opportunities to come, Kroger can point to immediate savings on offer in the Cincinnati region. So that may help soften the blow, for shoppers who will miss their double coupons. It’s Kroger’s hope that they will find that they can save just as much without them. But so far, many area Kroger shoppers aren’t buying it, as Kroger’s Facebook page is already filling up with complaints. Announcing the good news and the bad news at the same time, is a PR move similar to one that backfired on Texas’ H-E-B, when it announced last month that it would launch a digital coupon program at the same time that it announced it would no longer accept “stacked” manufacturer and store coupons (read: “Couponing Customers Urge H-E-B to ‘Bring Back the Stack!’”). Customers overwhelmingly focused on the bad news about coupon stacking, and ignored or dismissed the news about the digital coupons.
Meanwhile, Kroger’s low-price rollout itself confirms what’s been reported here before, namely that Kroger may have been using Hampton Roads as a “test market” of sorts. After introducing the first “New! Lower Prices” campaign there, Kroger customers in Hampton Roads “have responded very well and we are showing good sales growth to support that,” Kroger spokesman Carl York told Coupons in the News in December. Though it’s worth noting that double coupons continue in that market. “At this time our ‘New! Low Prices’ program is just in Hampton Roads,” York went on, but acknowledged that “we are testing strategies there.”
The rollout of a Walmart-style “everyday low-prices” approach comes just over a month after a study from retail consultant AMG Strategic Advisors predicted that within a few years, the majority of U.S. retailers will move away from sales and promotions in favor of more stable, lower prices across the board (read: “Pundits Predict Lower Grocery Prices”). “High-low pricing” emerged several decades ago as a marketing technique, where everyday items’ higher “regular” prices are frequently offered at a deep discount. The thinking is, that for all the customers drawn into the store to take advantage of temporarily marked-down prices, the corresponding lower profits will be offset by shoppers’ purchases of items that are marked up at full price.
Everyday low prices appeal to shoppers who don’t like keeping track of sales and coupons, and just want to walk into a store and get the best price. In fact, Walmart’s recent advertising campaign is based entirely on that premise – and it’s even targeted Kroger’s prices in its advertisements. But coupon users depend on high-low pricing, waiting and timing their purchases for when an item is on sale, and they have a coupon, to get the rock-bottom price.
So could the expansion of Kroger’s “New! Low Prices” campaign be a sign that the country’s leading grocery chain is making a move toward becoming more like Walmart? “That line has been blurred a little bit,” Jeff Metzger of Food World magazine told Coupons in the News. Given the current state of the economy, and increased competition in the grocery industry, he sees such pricing changes as more of a “meeting in the middle.” High-low stores are more sensitive to everyday low pricing, while everyday low pricing stores are getting more promotional, offering sales and “rollbacks” that would seem to indicate that their “everyday low prices” are not quite as low as they could be. Kroger does still plan to put out a weekly circular and promote sale prices in the Cincinnati region, so its “New! Lower Prices” approach doesn’t mean the elimination of sales altogether.
For now, though, the verdict is out on whether the appeal of lower prices will offset the disappointment of losing out on doubled coupons. And depending on how residents in the Cincinnati area respond, keep a close eye on Kroger stores in other regions to see what comes next.
(Check out these followup stories: “The Death of Doubles?” and “When ‘New Low Prices’ Are Neither New, Nor Low (For Long)”).