Grocery wars; Wal-Mart Supercenter wins out over other markets in Leominster area.
LEOMINSTER - One year after opening its Supercenter off Route 117 and jumping into the Leominster supermarket scene, Wal-Mart is the cheapest place to buy a basket of commonly purchased groceries.
The Telegram & Gazette surveyed the prices of 12 items at four supermarkets one year ago and then again last week in an effort to determine whether competition from Wal-Mart Stores Inc., of Bentonville, Ark., would drive down food prices at competing stores.
The answer to that question is unclear. In fact, when the survey started, the cheapest grocery basket was at Market Basket, a store owned by Demoulas Supermarkets Inc. of Tewksbury.
But in the year since Wal-Mart opened, Scarborough, Maine-based Hannaford slashed the price of a grocery basket by 12 percent. Market Basket managed to beat Wal-Mart on price in a number of categories, sometimes by just a few pennies.
In the end, Wal-Mart won the price survey this year mostly because it offered the best deal on coffee and lowered the price of its own grocery basket by 8 percent over the last year.
The largest retailer in the world, Wal-Mart sells more than $100 billion in groceries in the United States through its traditional stores and Supercenters. The company leverages its huge buying power to get the best prices from suppliers. It cuts out middlemen to streamline its supply chain, which also saves money.
Wal-Mart has been slow to develop Supercenters in Massachusetts, where large tracts of real estate have traditionally been scarce and expensive. But in recent years, Wal-Mart has opened Supercenters in Northbridge, Leicester, Ware and Leominster. It is developing another Supercenter in Worcester.
In a study released last year, University of Massachusetts at Amherst researchers calculated that families living within five miles of a Wal-Mart Supercenter could save $88 to $223 per person each year on food by shopping exclusively at Wal-Mart. Families shopping at other stores within five miles of a Supercenter could expect to save $37 to $104 per person each year.
Wal-Mart's presence forces competitors to act, according to UMass Resource Economist Nathalie Lavoie.
"One way or another, they have to do something, and I think it's either pricing or quality of service or a combination of both," she said.
In Leominster, a basket of milk, eggs, bread, produce, coffee, ground beef, tomato sauce, pasta and frozen waffles, sold for $27.51 at Wal-Mart last week. The same basket cost $29.34 at Hannaford, $29.76 at Market Basket and $33.68 at Shaw's.
Over the last year, all four stores dropped their prices on milk and eggs. Bread costs went up everywhere. Hannaford slashed prices on carrots and apples over the last year. Wal-Mart offered the best price on Ragu tomato sauce in both surveys.
Michael R. Norton, a spokesman for Hannaford Bros. Co., said the chain is accustomed to competing with Supercenters in other markets and was able to wring out freight and corporate expenses over the past year. The company's top focus is price, particularly on items such as milk, followed by quality, convenience and healthy food, he said.
"If you're good on those items (milk), people are going to come back to you again," Mr. Norton said. "We have a lot of incentive to be priced right on those kinds of things."
Shaw's Supermarkets Inc. of West Bridgewater, part of SUPERVALU Inc., also focuses on a combination of factors, including convenience, service, selection, freshness, the experience in stores and price, according to Shaw's spokeswoman Judy Chong. It offers loyal shoppers discounts on gasoline purchases.
"We keep our eye on the competition, in whichever market we may be in, but our focus is on customers and we know how to deliver value to them," she said.
Spokesmen for Wal-Mart and Market Basket did not respond to requests for comment.
For shoppers, the competition with Wal-Mart likely means more choice.
"You knew when that came into town that there was going to be a competition," said Sandie Chacon of Leominster, who is the city's small business coordinator.
Her sister, Sue Williams of Leominster, said she mainly shops at Market Basket for its prices and because it offers the food she likes.
"I don't really shop there (Wal-Mart) for a whole lot just because they don't have the variety I typically want," she said. "I go there for quick stuff, like milk and quick sandwich stuff."
Lisa L. Vallee of Leominster favors Hannaford for its location close to downtown, produce and organic offerings.
"It is a little more pricey, but I find the convenience, given the constraints of a working schedule, outweighs the few dollars savings," said Mrs. Vallee, the city's economic development coordinator.
Most grocers don't want to compete with Wal-Mart on price, according to Jim Hertel, managing partner of Willard Bishop, a retail consulting firm in Barrington, Ill. Wal-Mart can cut prices deeper and longer than typical supermarkets, he said, and most grocery retailers would rather compete by focusing on factors such as location, convenience and quality.
"They need to be aware of what Wal-Mart prices are and develop a fairly sophisticated and nuanced approach to it," Mr. Hertel said. "You don't want to have any what I call `insult prices' in the store, and you want to make sure people know how to shop your store so they find the best values."
ART: PHOTO; CHARTS
CUTLINE: (PHOTO) Wal-Mart Supercenter (CHARTS) Comparing prices // A look at select grocery items at Leominster food stores.
PHOTOG: (PHOTO) T&G Staff Photo/DAN GOULD (CHARTS) Prices compiled by Lisa Eckelbecker; T&G Staff/DON LANDGREN JR.
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|Publication:||Telegram & Gazette (Worcester, MA)|
|Date:||Jun 7, 2009|
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