retail news in context, analysis with attitude

The Wall Street Journal reports that many of the nation’s supermarket chains - including Kroger, Safeway and Supervalu - “are pumping more money into advertising to fend off competition from mass discounters, drug stores and even dollar stores.”

The problem is that the advertising and promotional expenses are cutting into profit margins, and so even if they result in higher customer traffic and higher sales, profits could prove to be disappointing in the short-term.

The long-term goal is to create sustainable customer loyalty that will serve them well when prosperity returns.
KC's View:
Of course, the supermarket chains are not operating in a vacuum...and the non-traditional competition are likely to ramp up their advertising and promotions as well in order to build market shares and protect their investments in various food categories.

If there is a potential problem here, it is that all these ads and promotions will be focusing on price ... and retailers may spend less time focusing on the other things that they need to do in order to have a differential advantage. Sure, they have to be sharp on price...but on an increasingly level playing field, it is critical to clearly define the other attributes that will give them differential advantages in the marketplace.