Albertson’s Will Switch to ‘Everyday Low Prices’

In what could be the opening volley of a renewed price war among Southern California grocers, Albertson’s will announce today that it is switching to an “everyday low prices” format at its supermarkets in the area.

The change involves scrapping Albertson’s “double coupon” program in favor of consistently lower prices on merchandise throughout its stores, a spokeswoman said.

Analysts said Albertson’s plans could mark the beginning of a local price fight that has been anticipated by many industry observers. But they added that, as the No. 6 supermarket chain in the Los Angeles area, Albertson’s is probably too small to put immediate pressure on its big rivals Vons, Lucky and Ralphs.

More likely, analysts said, is that a successful format change by Albertson’s would squeeze smaller chains such as Hughes Markets and perhaps Alpha Beta, along with independent grocers.

The competition among the Southland’s grocers is widely expected to escalate this fall when Smith’s Food & Drug Centers, a Salt Lake City-based chain with a reputation for low prices, comes to Southern California. It has announced plans to open about 10 stores in the Southland in 1991 and 75 stores during the next five years.

In addition, the $251-million acquisition last month of Alpha Beta supermarkets by Yucaipa Cos. could alter the balance of power among local supermarkets. Yucaipa owns Boys and Viva markets.

Moreover, Vons and Ralphs have grown stronger financially over the past year, after paying down heavy debt loads.

Albertson’s apparently devised its new price format to invigorate its sluggish business in Southern California. The Boise, Ida.-based company is the nation’s sixth-largest supermarket operator, with sales of $8.2 billion last year. It is a robust competitor in much of the West and the Sun Belt.

But in Los Angeles and Orange counties, Albertson’s is an “also-ran,” with a market share of about 5%, said Gary M. Giblen, a food retailing analyst with Paine Webber.

Among the chain’s problems in Southern California, analysts said, is that it apparently is regarded by consumers as having high prices. That perception has persisted despite a 1988 survey by the California Public Interest Research Group showing that Albertson’s prices were third-lowest among seven of the area’s biggest supermarket chains.

Albertson’s already offers an “everyday low-prices format” at its stores elsewhere across the country, and it will join Lucky in offering that approach in Southern California.

Although it will stop offering discounts of twice the face value of manufacturers’ coupons, a policy followed by most of Southern California’s big chains, Albertson’s will continue to accept coupons at face value.

The incentive for shoppers, however, is what Albertson’s will tout as new “rock-bottom” prices.

Supermarket Snapshot Albertson’s, based in Boise, Ida. is among the smaller chains in the competitive Southland grocery industry. In Los Angeles and Orange counties, the dominant players are Vons, Lucky and Ralphs. The market share figures below reflect the percentage of shoppers that consider a store their “primary” supermarket. Albertson’s: 5.0% Hughes: 5.3% Alpha Beta / QFI: 12.9% Ralphs: 17.9% Lucky: 18.2% Vons: 21.0% Others: 19.7% Source: Los Angeles Times Marketing Research Department