• Wall Street Journal, Friday, October 15, 2010 8:52 AM

Supermarket chains are increasing their advertising and -- sometimes concurrently -- slashing their prices in an effort to build a cadre of loyal customers and compete against the legions of Walmarts, Targets, Costcos, Walgreens and Family Dollars that have encroached on their territory, Paul Ziobro reports.

Collective advertising spending rose 19% to $393.3 million during the first half of 2010 compared with 2009, according to Kantar Media. Other retail segments rose 9.5% over that period.

Profit margins are taking a hit, analysts say, but they suggest that the strategy could help some chains shake the image of being too expensive. Ziobro singles out Great Atlantic & Pacific Tea Co. as well as Safeway, whose ambitious "Promise" campaign has been highlighting lower prices on thousands of items in television and other media. Kroger and Supervalu have also increased ad spend.

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