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Hutchinson, Kan.-Based Supermarket Chain Lowers Prices in Wichita Market

Posted on: Wednesday, 9 November 2005, 00:00 CST

By Nicholas Jungman, The Wichita Eagle, Kan.

Nov. 9--Love Dillons but love Wal-Mart's prices more?

Dillons says it has heard you loud and clear.

The Hutchinson-based supermarket chain says it has lowered "thousands of prices" on staple grocery items in the Wichita market-- in response, it says, to customer feedback.

"We do research in the market all the time," Dillons spokeswoman Su-Ella McKinzie said, "and this is what our guests want."

But Dillons isn't just being magnanimous. "They're doing what they have to do to fight back," said retail analyst George Whalin.

Against the king of price-cutters. Wal-Mart.

Dillons' McKinzie said stores in the Wichita market have been busy rekeying prices for a week and a half, and television commercials and billboards recently have been touting the changes. The printed sale circular, inside today's Eagle, is the first to offer a detailed look at what Dillons has done.

The lower prices are not a short-term sale, McKinzie said, although she stopped short of calling them permanent. All the price cuts are reserved for members of Dillons' Plus Card savings program, which McKinzie noted that any shopper can join at any time.

Broad price cuts are a typical response when a supermarket sees its market share threatened, and probably the most effective one, said Whalin, head of Retail Management Consultants in San Marcos, Calif.

"The reaction is fairly common," he said. "It's what's happening all across the country."

It's safe to say that Dillons has noticed you've been coming around less often in recent years. And it knows where you've been going instead.

Like it has across the country, Wal-Mart has moved aggressively into Wichita, expanding all its local stores to handle groceries, and adding whole new stores in fast-growing neighborhoods in the northwest and far east.

Dillons particularly feels the pinch, having long been the 800-pound gorilla of local supermarkets. As recently as three years ago, it was collecting nearly $2 of every $3 spent on groceries in Wichita. So here, much of Wal-Mart's growth in groceries comes at Dillons' expense.

Traditional supermarket companies -- like Dillons parent Kroger Co. -- have failed to make much of a dent in Wal-Mart's surge by marketing their higher quality to customers, Whalin said.

What works against the companies, he said, is decades of touting to customers the sale of the week or double-coupon day.

"Ultimately, most supermarket shoppers are price-conscious because supermarket companies have done a wonderful job of training them to be," he said.

And so, in a way, supermarkets that promote lower prices are just doing what comes naturally. Wal- Mart's just making them dig deeper now.

So if by lowering "thousands of prices," Dillons can persuade you that it's at least competitive on price -- and if it can maintain its standards for quality and selection -- maybe you won't become a loyal Wal-Mart shopper.

Whalin, for one, thinks Wal-Mart's total victory in the grocery wars is far from assured, at least as far as Dillons and its parent company are concerned.

"Kroger," he said, "is a very well-run company."

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To see more of The Wichita Eagle, or to subscribe to the newspaper, go to http://www.kansas.com.

Copyright (c) 2005, The Wichita Eagle, Kan.

Distributed by Knight Ridder/Tribune Business News.

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WMT, KR,

Source: The Wichita Eagle (Wichita, Kan.)

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