Wegmans' Price War Against Itself

Wegmans, the East Coast grocery chain that—like many grocers across the country—has been engaged in a price war with competitors, has taken a novel approach in a new ad campaign: comparing itself to itself.

A year ago this month, Wegmans announced that, despite its then-fast-rising costs, it would lower prices on many of its products. In Sunday newspaper inserts yesterday and on in-store signs, the 70-store chain notes that many of its prices have remained low and even dropped. And it put numbers to its claims, telling consumers how much various items cost then compared to now.

In some cases, the price drops have been dramatic. Wegmans' prices for pork and milk have fallen by 26 percent over the past year. Bread is down by 20 percent. Beef is 17 percent cheaper. Of course, it has gotten far easier to lower prices as commodity costs have fallen.

Wegmans is a private company—one of the biggest in the country—and so is less prone than its publicly traded competitors to price products with quarterly profits in mind. Above all, it wants to hold on to customers and retain market share. With this move, coming as it did just as the economy was imploding, even as costs were shooting up, the chain likely lost money. It claims that consumers have saved about $20 million.

It will be interesting to see what the chain might do if commodity and fuel costs soar again. We have to assume that if it raises prices in the future, it won't run similar comparison ads.