ROCHESTER, NY – In November of 2008, many families were feeling the economic shock of their lives as the nations financial system teetered, jobs melted away, and household budgets shrank. Wegmans announced a decision to lower hundreds of prices on frequently purchased products. If customers and employees were facing leaner times, the company reasoned, Wegmans should also live with leaner times.
At the time of these 2008 price cuts, Wegmans still faced very high costs for ingredients and fuel. Like the rest of the food industry, the company struck contracts earlier that year to lock in prices at a time when they were rising rapidly, and they had to honor those contracts until they expired in 2009.
It was a time of uncertainty for the food business, says CEO Danny Wegman. But, we dug in and made those moves because we knew our employees and our customers were struggling and needed help. We also knew that prices for fuel and commodities were coming down. So there was light at the end of the tunnel, but still no guarantees.
A few months later, in January of this year, Wegmans followed with price reductions for prescription drugs, including free generic antibiotics. This, added to lower food prices, has meant a total cost savings for customers of $20 million on an annualized basis, the company estimates.
Prices that Wegmans lowered a year ago have stayed low, and many have actually declined even further. In many categories the reductions have been dramatic. Average retail prices for poultry are down 7%; pork, 26%; and beef, 17%. In the dairy case, cheese prices have dropped 11% on average, and milk, 26%. Packaged breads are down 20%, and theres a similar story to be told in the produce department and grocery aisles.
I have a sense that shoppers need to be reassured. They need to know that we have kept our eye on the ball, added Wegman. That we monitor prices very closely and take steps to control our costs so we can keep prices low, and that what has happened to food prices is a cause for celebration.
To reinforce this message, on Sunday, November 1, for the next few weeks, Wegmans weekly print ad will show prices now compared to a year ago for many items, and signs on shelves will point out key items that are priced lower than last year.
Says Danny Wegman: Everyone is watching the stock market as a barometer of economic health, when, in fact, it is the food market that had just what the doctor ordered.
Source: Wegmans