Update on the Krogers/Fred Meyer price "rip off" discussion

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Here and here I've had a few words to say on what I believe to be a rip-off policy used at at least Fred Meyers.

Although I disagree with their response, below, I certainly DO give them credit both for their response and the detail contained within their response.

Feel free to read their response first, and my rejoinder below it.


On Thu, Mar 19, 2009 at 11:29 AM, Criss, Kent E wrote:

Terry, 

Thank you for your comments recently regarding some issues you encountered with our Fred Meyer Orchards Store and more importantly, Fred Meyer pricing policies in general.Please let me try and address the issue’s in your letter. 

In regards to our retail pricing, we strive to be the lowest priced, full service supermarket, in every area we operate. In order to achieve that, we have an outside service check our pricing weekly against our competitors to ensure that we meet our objectives. We will not beat every competitor on every item in the food department, but generally, overall, we will be more than competitive. 

Our regular retails our calculated based off the manufacturers cost and a standard mark up for that particular category. Any fluctuations to this retail would be based on competitive pricing in the market. 

In regards to our Food ads, I would be interested in knowing where our ads fall short of your expectations. Our weekly coupon items are generally very sensitive. We strive to include items that our customers need, use, and buy most often. Many of these coupon items are at or below our actual costs. 

Regarding your comment on Coke pricing and our perceived high retail. Yes, you are correct that our retail shows a $ 9.49 price. Let me run you through the process and show you why that is, and how we adjust. 

Pop Companies establish a list cost on their items, then give us a large allowance ongoing, brining the cost of the product down considerably. At Fred Meyer, our retail pricing system generates a retail based off the FULL LIST cost from the supplier. This is why our tag shows an extremely high retail of $ 9.49 on 12 pk. Coke. Since we have a large allowance on going , our actual everyday retail is considerably lower, in this case, $ 5.99, as the orange APR tag at store level should show. You should never be charged the $ 9.49 price. 

We run these brands virtually every other week on promotion at a furthur[sic] reduced retail. 

We understand how confusing this is to you and many of our customers. 

This is an issue we are trying to resolve with all pop companies on how they price their items to us. 

Regarding our higher ad retail (2/$10) on Coke 12 pks., it is not as competitive in the market as you say. 

Most retailers use pop as a means of getting customer traffic in their stores. The cost of running these “HOT” retails is very costly to the stores . 

Fred Meyer has found other commodities that will generate the same traffic, but at a somewhat smaller expense, which enables us to reduce pricing in other area’s, thus, allowing us to be more competitive. This is the reason we generally do not run “HOT” pop ads. 

Next, Sobe Drinks 20 oz. 

Just like Pop, we price off the manufacturers list cost. That retail is listed as $2.99, but our true everyday price is $1.59. You should never pay the $2.99 retail. When we promote this product line, it is generally at a 3/$4, or a 4/$5 retail. 

I hope this gives you some insight on why Fred Meyer prices as we do. 

Thanks again for your comments. We appreciate our customers feedback. 

Sincerely, 

Kent CrissDirector of GroceryFred Meyer Stores

My reply:


Thank you for your thoughtful and detailed response.

For me, then, the issue is one of verbiage.

The phrase "reg" does not lend itself well to the explanation you have provided.

Also, I am not referring to an "ad" although the item in question may be in an ad. I am referring to the price sign on the end display that has the product.

When the price sign says "reg $9.49," and "save $4.49" as a consumer, the meaning is that YOUR STORE regularly sells the item at $9.49, and that if I buy it NOW, I will be "saving" $4.49.

I'm not aware of, nor do I believe that most people are aware of a "manufacturer's list price." When I look at price sign and it says "reg" what I'M thinking is that the price quoted there is what YOU regularly sell the item for.

If, for example, you REGULARLY sell the Coke for $5.00 (which seems to be about what this store DOES regularly sell it for) and I BUY the Coke ON SALE for $5.00...

Then how much have I saved?

Regardless of the LIST price, a REGULAR price would typically be defined as the typical price that I can get a product in your store out the door. If you usually sell Coke at $5.00 and I can get it for $4.00, then I've saved a buck.

I have limited tolerance for the "manufacturer's list price" explanation because the manufacturer could, conceivably, list ANY number for a price.

Do you REALLY think that if, for whatever the reason, Coke decided to show a list price of say, $20, and you continued to sell Coke at $5.00, that I am saving $15.00 if I buy it at your store?

Does that make any sense to you?

I believe, in the interests of honesty, that your definition of "reg" should be revisited and that the definition of "reg" should not reflect an arbitrary number, but instead should reflect what I, and I would venture to say the vast majority of every other shopper in your store would think it means.

If, for example, the average price of this product was, say, $5.49 over the past 6 months, figuring in the sales prices during that same time frame, then it would be both realistic AND honest if the sign said AUTOMATIC PRICE REDUCTION $5.00 "Reg $5.49," "SAVE .49."

Otherwise, it seems like an empty, psychological ploy designed to get the consumer to believe that they're getting a much better deal than they really are.

But I'm such a cynic... and THAT can't be the case.... can it?

Thank you for your response, and I will be blogging it here:

http://clarkcountypolitics.blogspot.com
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