PLEASANTON, Calif. It just doesn’t pay to be too promotional anymore.
Last week during a quarterly conference call with investors, Safeway chairman, president and CEO Steve Burd explained that especially during a recession economy, his company’s move to an every-day-low-price pricing strategy is likely to generate more loyal shoppers — as compared with the competition in today’s economy — by conducting heavy promotions across certain categories in an attempt to increase foot traffic.
“We have traditionally been more promotional than virtually anybody we compete with,” Burd said. “Because of our movement to everyday price, we actually see … a lower percentage of our business purchased on promotion, although not much. And then rest of market, we see more of their business purchased on promotion,” he said. But the fact is, “the budget shopper is not very loyal at all,” Burd added.
Shoppers today, particularly the budget shopper, are channel surfing more often, Burd said. So if promotions designed to draw consumers in leaves many of those shoppers walking out only with those promotional items, “that would really hurt you from a P&L standpoint,” he said.