Grocers lean into price cuts, rewards perks as inflation tightens consumers' wallets

Dive Brief:

Discount supermarket chain Lidl announced on Wednesday it will start dropping prices on more than 100 items, including brand names and Lidl Preferred Selection, in all of its U.S. stores with a price-cutting campaign that starts next Wednesday and will last until August.
Giant Eagle recently announced members of its myPerks savings program can see discounts of up to 20% on more than a thousand items, including meat, dairy and produce, WCMH-TV reported last week.
In mid-May, Weis Markets unveiled a multi-million-dollar investment to cut prices on “hundreds of its best-selling frozen products,” including brand names and private label.

Dive Insight:

All three grocers cited inflation as the driver behind their new savings as higher food prices and skyrocketing fuel costs spur consumers to trade down on products and reduce trips.

"Given recent increases in consumer costs, saving money is extremely important to our customers, and we are confident these reductions will generate significant savings for them,” Robert Gleeson, senior vice president of merchandising and marketing at Weis, said in the announcement.

For Weis, the price reduction on hundreds of frozen products is part of its Low, Low Price program, which launched in 2019 and currently includes more than 7,000 grocery products and almost 80 produce items. For the frozen items, customers can expect cuts of between 13% and 33% on items such as Birds Eye Steamfresh frozen vegetables, Klondike Ice Cream bars, DiGiorno frozen pizzas and Marie Callender’s dinners.

Giant Eagle is identifying items with the myPerks savings in-store with a blue shelf tag with the lower price, WCMH-TV reported. By linking product price cuts to its savings programs, the grocery chain can capitalize on consumers' desires to reduce their grocery bill while looking to capture consumer loyalty.

Lidl, which established its U.S. headquarters in June 2015 and now has more than 150 stores across nine states on the east coast, said customers will be able to save more than $50 per basket of items included in the price-cutting campaign. A sample list of included products in the price reductions includes sirloin steak, wheat tortillas, paper towels, apple juice and pepperoni.

"As many families contend with rising prices due to inflation, we hope to ease their financial burden at the checkout counter by investing even more to lower our prices," Lidl US President and CEO Michal Lagunionek said in the announcement. "This price-cutting drive is part of Lidl's ongoing commitment to offer the best value in every community we serve."

The message Lidl shared in the announcement on its price-cutting campaign mirrored one from competitor Aldi. On April 12 — the day Consumer Price Index (CPI) data for March was released, showing food-at-home prices shot up sharply during the past year — Aldi US CEO Jason Hart issued a letter to consumers saying the chain will be the "low-price leader in every community we serve."

The CPI data for April showed that food-at-home prices increased 10.8% over the past year — the largest 12-month increase since November 1980. The U.S. Bureau of Labor Statistics is expected to release the CPI for May next Friday.

Customers and retailers are also feeling the sting of steep prices at the gas pump. In April, Save A Lot rolled out a pricing promotion linking meal ideas with the high fuel prices by advertising 10 ingredient bundles that each cost less than the price of 2 gallons of gasoline.

In their most recent earnings calls last month, Target and Walmart both said fuel costs hurt their profits. In March, Instacart and Uber added fuel surcharges to help cover the higher fuel prices delivery providers are facing.