Long Road Back: Modesto stores compete for consumers seeking values

05/03/2010 5:14 AM

09/11/2014 2:35 PM

One silver lining to the recession of the past of couple years: Businesses are competing more than ever for your money.

Consumers can get pizzas for $10, carpets cleaned for 40 percent off and zero percent financing for cars.

Some businesses are seeking new, creative ways to attract -- and keep -- customers. Skin-care companies host Facebook sites; department stores send e-mails; grocery stores offer electronic coupons. Kmart and Wal-Mart are experimenting with drive-throughs.

Discount merchants are doing a brisk business. Groceries 4 Less on Carpenter Road in Modesto has a steady stream of customers each day. The store offers a variety of staples, from Gatorade for 75 cents to $4 for Armor All cleaner.

Eva Neri is among those consumers trying to take advantage of the price breaks. The 42-year-old Modesto woman said she shops at the store for basics like napkins and packaged goods.

"You can save a couple bucks every time," she said.

The recession, now stretching into its third year, has shoppers looking for the best value for every dollar. And there's no sign of an end.

Though a recent survey offered more hope the economic rebound is gathering steam, economists believe confidence will remain relatively weak for at least another year because companies haven't begun to ramp up hiring significantly.

The Conference Board, a private research group based in New York, said last week that its Consumer Confidence index increased to 57.9, up from a revised 52.3 in March. The April reading is the highest since September 2008's 61.4. That was when the financial crisis intensified with the collapse of Lehman Brothers, sending confidence into free fall the following month.

Not on solid footing yet

April's reading is still far from what's considered healthy. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.

"I think it is good to see the (confidence) numbers moving up again, but I don't call it a major change in confidence," said Gary Thayer, chief economist at Wells Fargo Advisors. "But it does reflect a more optimistic view in the job market."

Customers and businesses find themselves in a tricky situation. Recessions typically end as people start spending money, said Kelvin Jasek-Rysdahl, professor of economics at California State University, Stanislaus, and co-director of the university's Center for Public Policy Studies.

But with the housing market crash and banks closing down lines of credit -- not to mention so many people taking pay cuts or losing their jobs -- that's more difficult this time. In addition, people have started to save more and use credit less.

"Back in the early '80s, the economy grew quite strong quickly," Jasek-Rysdahl said. "Recovery is much harder. This is something we haven't dealt with a very long time."

It remains to be seen if frugal habits will take hold permanently, as they did for many during the Great Depression.

Fighting for every dollar

For now, businesses -- and cities -- are fighting for every dollar that is out there. Turlock Mayor John Lazar emphasized that in his State of the City address in March.

"It is vital that we recog- nize the direct connection between economic development and the city's ability to provide a gold-star standard of customer service," he said. "We must treat each customer as if our future depends on it, because it truly does."

Frank Whitney, president and chief executive officer of the MidCal Better Business Bureau in Stockton, said complaint volume has remained relatively steady during the recession.

Trying to end contracts

Car dealerships continue to lead the pack for complaints, though fewer new cars are being sold.

"It could be a service issue more than anything," Whitney said. "People are trying to get more value out of their warranties."

He said he has noticed more calls from people regarding contracts, such as gym memberships and cable television agreements.

"People start looking at their budgets and seeing what they can get rid of," he said. But the fine print on some of those agreements includes hefty penalties for early termination.

Whitney said his office, which resolves roughly two-thirds of complaints to the customers' satisfaction, has seen merchants and service providers realizing they have to make their customers happy.

"Businesses are responding more," he said. "Businesses are a little more aware, more proactive."

Brad McWilliams, owner of Extreme Pita on McHenry Avenue, agreed that being proactive -- and offering customers a better value -- is key in tough economic times.

Recent buy-one-get-one-free coupons have proved popular, as has a "banner shaker" promoting the business by waving a sign on the street.

"It seems to be generating more traffic," McWilliams said. "Traffic is up over the last six weeks."

Value shoppers on the rise

McWilliams said another coupon is coming out this month. "People are definitely looking for more of a value," he said.

Debbie Madrid said she always looks to get the most from her money. She is a regular discount grocery shopper, recently picking up granola, biscuit mix and cranberry juice at Groceries 4 Less. Madrid works in food distribution, and said she is sure of the quality of the items she's bought since she started shopping there about two years ago.

"You can't beat it when you're on a budget," she said, adding that she saves $50 or more on trips that cost about $75 each.

She has grandchildren, and she said trying to offer them healthy foods gets expensive quickly. Going to discount stores makes it easier.

She pointed to packages of sliced almonds. "These are going into a Chinese chicken salad."

The Associated Press contributed to this report.

Bee staff writer Patty Guerra can be reached at pguerra@modbee.com or 578-2343.

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