Wegman's Wages War on Inflation

Grocery chain Wegmans--aka the best supermarkets in the entire world--is taking an unusual step in the face of rising food prices:  they're freezing the price of forty common items.

The supermarket chain, which has locations in Lanham, Fairfax, Sterling and Woodbridge, said it will freeze the prices on 40 products for the rest of the year.

The products include orange juice, coffee, cereal, bananas, red peppers, pasta and sauce. Also on the list are chicken, ground beef, salmon, tilapia, tuna, frozen pizza, frozen vegetables and deli ham and turkey.

Nearly all of the products are the Wegmans brand.

"We can be more aggressive with pricing for our own brand because we have better access to information on the factors that determine costs," said Wegmans spokeswoman Jo Natale, in a news release.

"These products are already the best value in their respective category, and for that reason, they are also usually the top-selling brand in a category," Natale says.

The items chosen for the price freeze are products most families use a lot, company officials say.

"News that food prices will rise is worrisome for our employees and our customers, especially when folks are also dealing with higher gas prices," says Chief Executive Officer Danny Wegman.

Wegmans, which operates 77 stores in New York, Pennsylvania, New Jersey, Virginia, and Maryland, estimates the move to freeze prices could save a family of four about $400 a year.

This is genius.  Obviously, families spend a lot more than $400 a year on their groceries; by letting them save on generic staples, the company presumably thinks it will make up more in other sales than it loses on the frozen items.  Especially because they're big recurring items that families pay attention to.

Wegmans has been expanding outside of its traditional base in New York State, where it is already beloved for somehow combining high quality and value.  The company is no longer opening stores in New York, perhaps because the state's business climate is routinely ranked among the worst in the nation.  So a promotion like this will introduce it to new consumers who haven't yet built up the legacy of goodwill that upstate New Yorkers feel for the company.  Not only will they bring new customers into their stores, but presumably long after the current bout of food price inflation subsides, those customers will remember Wegmans as the company that helped them out a little when times are tough.

It will be interesting to see if other chains follow suit.  Wegman's is a private company closely held by the family that founded it; they don't have any shareholders to answer to.  And the stores are extremely successful because of the quality and value.  Established giants may find their move hard to emulate.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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