June 29, 2015

Shoppers Fret at Some Prices but Willing to Pay More for Some Kosher Products

New York - There is a general feeling by kosher supermarket managers that margins continue to shrink on many grocery items as competition increases and consumers opt for other choices. Some of the manufacturers who for many years had an “exclusive” on an item are suddenly finding that the aisles are getting crowded with competing brands. In a survey of several stores in New York, it was clear that there are also items that consumers are more likely to pay more. They were less likely to pay for expensive crackers, for example, but willing to pay more for a new flavor chip. If this trend holds up, it would suggest that manufacturers will have to come up with the “different” products to secure larger margins as an offset to those that cannot command heftier margins. Price parity in some categories has to some extent eliminated the competition, say the kosher food executives. For example, white albacore tuna available in one store in five different brands featured almost identical pricing. It is the inability to increase prices on many staple items that has forced many supermarkets to make up the profits in such areas as fresh meats, fish, cheese and prepared foods. The latter has particularly emerged as a profit center for many of the markets, despite its high labor costs. It became fairly obvious that when it came to prepared food, it was almost impossible to compare prices between stores, although in some cases, there were significant differences for a lb. of potato salad or cole slaw. According to a recent study by Deloitte, there has been a national decline in “must have” products. It also showed “a willingness to pay a premium for a product for the sake of health and convenience.”