Reader Buckland offers this comment on Wegmans' strategy:
There are basically 3 pricing strategies in the grocery market:
1> Hi -- Hi. This means charging high prices but providing a large dollop of service, and only carrying the best of foods. Whole Foods would be an example here.
2> Everyday Lo. Popularized by the good folks in Bentonville, AR, this means quick adjustments to pricing and extreme efficiencies to keep things as low as possible.
3> Hi - Lo. This takes advantage of the fact that people only know the price of about 100 items in the average grocery store. If these prices are low they assume the rest are in line. It sounds like Wegmans has figured this out, and are probably having trouble competing in their market, possibly with Wal-Mart.
Hi-Lo is the most common strategy for smaller players in competitive markets. And no matter how it's pitched, this looks a whole lot like Hi-lo pricing.
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