Getting more bang for your buck at the grocery store

On a recent trip to Groceries 4 Less, James Stewart of Modesto said he wasn't sure he'd find the brand of bacon he likes.

But because of the store's low prices, and because money is tight, he said, a missing pork product wouldn't stop him and his wife from continuing to shop at the Modesto store.

"The cereal's cheaper here too," said Stewart, 58. "And we've got kids at home that eat up everything, and every bill seems to get higher."

Consumers such as Stewart have plenty of reasons to be price shopping these days, given the spate of home foreclosures, higher energy prices and other woeful economic news.

And managers at stores such as Groceries 4 Less report that sales are up, which they attribute at least partially to an economy that's down.

Groceries 4 Less co-owner Jason Matecki said sales have risen consistently at that store since he opened it last year. He credits the growth not only to increased exposure during the year, but more shoppers looking for lower-priced items, especially food.

"We do go through a lot of bread right now," Matecki said. "But it's not really any particular item, it's across the board."

Matecki, who's worked in retail for 14 years, said discount grocers usually benefit when times are tough.

A spokesman for the California Grocers Association said that a down economy usually has a positive effect on all grocery stores.

Dave Heylen said that's because consumers eat out less in a recession. That means they shop for more groceries because they're eating more meals at home.

A slower economy also puts pressure on stores with higher prices, Heylen said, because consumers may not shop there if they can get the same items for less elsewhere.

"If consumer demand calls for certain products to be cheaper, obviously, the retailer responds to that," Heylen said.

That consumer push is reflected in a study released earlier this month by the Food Marketing Institute, a food industry group based in Arlington, Va.

The study, done in conjunction with the American Meat Institute, found that more consumers were eating out less, buying less expensive products and switching their shopping to cheaper outlets.

FMI communications director Bill Greer said price already is a battleground between typical supermarkets such as Save Mart and Raley's, discount stores such as Grocery Outlet, club stores such as Costco and some big-box retailers -- especially Wal-Mart.

"You see all kinds of retailers trying to contain prices as much as they can," Greer said. "You have a 1 to 2 percent profit margin per store."

'Off-label' brands contend

That makes competition fierce to maintain that slim margin, he said.

One strategy that works well for many supermarkets, Greer said, is emphasizing their own "off-label" brands of dairy products and other food items.

Many stores have improved the quality of such brands to make them almost identical to name brands, Greer said, but at far lower prices.

And when people eat out less, he said, stores also see a boost in sales of prepared meals found in supermarket delis.

A store for any budget

Alicia Rockwell, communications director for Modesto-based Save Mart, said the store takes consumers' budgets into consideration by having regular Save Mart stores and warehouse stores under the FoodMaxx name.

"This multiformat approach has allowed us the opportunity to fit within any shopper's budget," Rockwell said in an e-mail. "This is extremely important since the family food bill is one of the few living expenses we can truly control."

Rockwell would not provide numbers on whether FoodMaxx stores have seen sales increase since the economy took a downward turn in the valley about two years ago.

For discount stores, there's the lingering question of whether their new customers will stick around when the economy improves.

Based on past experience, Matecki said, probably not.

"When the economy is good is not necessarily the best for us," he said.

But Yolanda Gonzalez, 31, won't be among those who abandon discount stores when the economy turns around, she said.

"You can't beat the price here on groceries or cleaning products," said Gonzalez, an industrial worker who described her financial situation as "pretty rough."

"This just fits my budget," she said.

Bee staff writer Ben van der Meer can be reached at bvandermeer@modbee.com or 578-2331.

This story was originally published March 23, 2008 at 3:41 AM with the headline "Getting more bang for your buck at the grocery store."