Hastings supermarket launches 50c 'aisle of value'

Thursday, 3 June 2021

A Pak ’n Save supermarket offering household staples for 50 cents each is deploying an effective strategy to gain market share – but it is likely to be a loss-leader, retail experts say.

Pak ’n Save Hastings, which earlier this year was selling tomatoes for 9c a kilogram, this week has canned tomatoes, beans, pasta, laundry powder, toothbrushes and other basic products for 50c in its “aisle of value”.

A post about the sale on Pak ‘n Save Hastings’ Facebook page garnered 1700 comments in less than 24 hours

Foodstuffs spokeswoman Antoinette Laird said the co-operative model of the supermarket company allowed individual store owners to set up their own prices and to negotiate directly with suppliers.

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Pak 'n Save Hastings has dropped the price of its sale items to 50 cents.

“This flexibility means Pak ‘n Save stores can also snap up local deals when they come their way,” she said.

Pak ‘n Save Hastings was approached for comment but referred all media requests back to the head office national communications team.

AUT (Auckland University of Technology) senior lecturer in marketing Dr Megan Phillips said that to be in the “aisle of value”, companies would normally pay the co-operative a fee of $500 or $600, and offer the product at a discounted rate so the supermarkets could add a margin.

But she said, in this case, it was unlikely the manufacturer could provide a discount deep enough for a margin to be added within the 50c. “It does seem likely that this is a loss-leader at 50c.”

The new Peka Peka to Otaki Expressway is expected to provide a boost to Otaki shopping says Chris Wilkinson.

She said supermarkets’ biggest challenge was getting people in the door, so Pak ’n Save would have opted for the strategy hoping it would attract shoppers who would then also buy higher-margin items.

First Retail Group managing director Chris Wilkinson said businesses offered these kinds of specials for market share.

“It is also about the wow factor. You can spend a huge amount of money on local advertising but doing these kinds of specials creates consumer conversations. It is something people don’t expect to see,” Wilkinson said.

The products on offer were all basic items but it would still draw customers in, he said.

Offering significant deals also attracted regional shoppers.

“You will find that people traditionally do trips from Southern Hawke’s Bay up into Hastings for those big one-off shops and this will refocus people if they have drifted back to their local stores,” he said.

“It is all about market share,” he said.

Kristal Leach, manager of Budget First, which does the administration for the Hastings Food Bank Trust, agreed that it was a loss-leading gimmick for the supermarket to pull people in the door but would still be good for its clients.

“A promotion like this will help them. They can stock up on a few of those things for winter.”