Grocery store openings increased 30 percent in 2018

New grocery store openings were up 30% in 2018 as compared to the prior year, according to a report by JLL. More than one-quarter of the new stores were in Florida, California and Texas as a result of expansion by Publix, Sprouts Farmers Market, Aldi, Kroger and H-E-B.

"Grocery is one of the strongest retail sectors, with nearly twice as many new stores opening than closing last year," according to JLL Director of Research James Cook.

Cook also pointed out that shopper habits have shifted to more frequent, shorter trips, and as a result, food retailers are focusing on developing smaller format stores.

"In 2019 we expect to see even more grocery stores rolling out their smaller-format stores as they battle razor-thin margins in prime locations, while still serving evolving consumer needs," said Cook.

Aldi, which accounted for 16% of total new stores by square footage, continues to expand at a rapid pace. And new formats, like Giant's 9,500 square foot Heirloom Market in Philadelphia, were recently introduced.

Lidl planning to take part of vacant Acme in Lansdale, PA

Lidl presented plans to Towamencin Township last month to take over about half of the former Lansdale, PA Acme that closed last summer. Acme occupied about 60,000 square feet.

"We're definitely looking at opening this year, this calendar year. That's the hope," said Sam Kachidza, Real Estate Manager of Acquisitions for Lidl U.S.

The site is just two miles from two existing full-service supermarkets - Giant and ShopRite, and two miles from Ralph's Corner Shopping Center, where Aldi is under construction.

So far Lidl has one store open in Pennsylvania - on MacDade Boulevard in Folsom, and the company is actively looking for more. Lidl stores in Lower Providence Township and Royersford are also planned.

Trader Joe's tops annual Retailer Preference Index

According to Dunnhumby's second annual Retailer Preference Index (RPI), Trader Joe's was the top grocery retailer, followed by Costco, Amazon, H-E-B and Wegmans. In a survey of 7,000 U.S. households, the RPI examined 56 grocery retailers to determine which companies have the strongest combination of consumer emotional sentiment and financial performance.

Market Basket finished 6th, followed by Sam's Club, Sprouts Farmers Markets, WinCo Foods, Walmart, Aldi, Peapod and The Fresh Market.

Dunnhumby said the rankings focused on seven "pillars": price; quality; digital; operations; discounts, rewards and information; convenience; and speed.

The company concluded that the top retailers on the index are mostly nontraditional grocers that have developed a highly targeted offering to bolster the value perception for their customer base.

"More traditional, regional grocery banners with a long history are hurting because of it, having relatively poorer-performing financials and/or emotional bonds," Dunnhumby said. "The reason: These traditional banners have inferior price perception and/or quality."

Trader Joe's also finished atop the rankings last year.

Grocery Outlet to open 40 new stores in 2019

Grocery Outlet, the California-based discount food retailer, has quietly ramped up its growth as competitors like Aldi and Lidl are making much more industry noise. Earlier this year the company opened its 300th store, and 40 new stores are expected for 2019.

Grocery Outlet, which purchased Amelia's stores in Greater Philadelphia a few years ago, operates stores in Pennsylvania, Oregon, Washington, Idaho, Nevada and California. Southern California represents their largest region, with 70 locations.

According to a recent story in Supermarket News, Grocery Outlet offers 40% - 70% off nationally recognized brands. They purchase from manufacturers that have excess inventory and pass their savings on to consumers. As a result of this opportunistic approach, the lineup of products often varies with each shopping trip. And since the stores are locally owned (not franchised), the product lineup may also vary from store to store. Each owner has the ability to choose what products they want to buy and sell.

"People love to save money, there's no question," said Phil Lempert, founder and editor of SupermarketGuru.com. "If you can combine that with a treasure hunt, from a consumer standpoint, it's great."

Although the products may differ from week to week, Grocery Outlet's inventory is predominantly made up of national brands, unlike Aldi and Lidl, who only offer a limited amount of national brands.

Recently Grocery Outlet has addressed its millennial customers, who are often their most vocal shoppers. Millennials seek both value and high quality, as well as an understanding of 'the experience of the food," according to Vice President of Marketing Layla Kasha. As a result, Kasha describes a new store in Los Angeles as "modern and hip, focusing on clean lines and a design aesthetic that matches the surrounding area."

Nationally, the model seems to be working, as Grocery Outlet recently surpassed $2 billion in annual sales, according to Supermarket News.

Aldi planning a major product expansion in 2019

Earlier this month Aldi announced a major product expansion to go along with its ongoing efforts to open new stores and upgrade existing locations. With the product expansion, slated to roll out early next year, Aldi says 20% of items in every store will be new when compared to the product mix during the same time one year prior.

The effort will focus on fresh, organic and easy-to-prepare offerings, and will boost the store's selection of fresh food by 40%. For instance, Aldi says it will have more ready-to-cook and organic fresh meat, a bigger assortment of produce, such as ready-to-eat sliced fruit and organic selections, and new vegan and vegetarian options such as kale and quinoa burgers, and chickenless patties and tenders.

Aldi also plans to offer a broader array of grab-and-go items like single-serve guacamole and organic hummus, fresh fruit and vegetable packs, fresh organic salsa, antipasti salad, as well as more drinks and refrigerated beverages. The retailer also said it will have one of the nation's largest selections of private label milk alternatives.

"We're in the middle of a five-year growth program, where we're opening over 800 stores to get to just under 2,500 stores by the end of 2022," said CEO Jason Hart. "We're spending a lot of money on that: $3.4 billion invested into new unit growth and $1.9 billion into the existing network of stores to remake the shopping experience, to give it a modern market feel and a little more space. We're adding about 20% more square footage to the stores."

Several Aldi stores opening soon in Southeastern PA

The Mercury reported recently that Aldi plans to open stores in Pottstown and Malvern, with the Pottstown store slated to open at the end of this month, and the Malvern store coming in the fall. And last week The Delaware County Times reported that Aldi would open on June 14 in the former Giant supermarket space in Brookhaven.

In addition, Aldi will begin construction in Lansdale once the former Super Fresh space is knocked down.

Aldi currently has more than 1,750 stores in 35 states, and has been aggressively opening new stores and renovating existing stores. The company plans to open about 750 new stores in the U.S. by the end of 2022.

Overall, Aldi has over 10,000 stores in 20 countries.

Grocery store openings fell sharply in 2017

According to an annual "Grocery Tracker" report from JLL, grocery store openings dropped 28.8% in 2017 compared to the previous year. The report states that the decline reflects chains' efforts to reexamine their current footprints and rethink strategies to deal with new online and brick-and-mortar competition.

JLL said that California led the way in 2017 with 1.6 million square feet of new grocery store space. Virginia and North Carolina combined for 2.7 million square feet of new space, and Texas was described as "still one of the hottest states for grocery expansion."

Sprouts, Grocery Outlet, Aldi and Lidl were mentioned as notable chains that are expanding.

JLL's report said that investment in grocery-anchored centers grew 5.3% in 2017, and the company expects supermarkets to retain high interest as anchor tenants for shopping centers.

"It (grocery-anchored centers) was one of the only retail sectors to see growth in a year of low transaction volume," the study said. "Grocery-anchored centers remain a safe bet for investors, as overall transaction volume for retail has been down, indicating the asset remains a stable sector."

The study mentioned that the increase in smaller footprint stores is a clear trend - for more compact formats like Aldi and Trader Joe's, as well as for traditional supermarket chains and mass merchants like Walmart and Target.

"The grocers that can deliver the right in-store experience, combined with the right online pickup or fulfillment plan... are the ones that will thrive, whether their stores are 15,000 square feet with limited products or take up a footprint four times as large," said James Cook, JLL director of retail research.

Supermarkets lead customer experience survey; Wegmans tops all companies

The Temkin Group, a research and consulting firm, said earlier this month that its 2018 Temkin Experience Ratings survey of 10,000 U.S. shoppers revealed that supermarkets were tops in customer experience ratings among 20 industries evaluated.

Supermarkets posted a rating of 78.5%, up from 78.1% in 2017. The industries near the top of the list include retail (74.4%), banks (73.1%), and parcel delivery (71.9%). A score of 80% or above is considered "excellent," 70% or higher is "good," and below 60% is deemed "poor."

Ratings are determined by customer responses in three main categories - success (can you do what you want to do?), effort (how easy is it to work with the company?), and emotion (how do you feel about the interactions?).

Overall, Wegmans turned in the top rating of all 318 companies included in the survey. The Rochester, NY-based food retailer had an overall customer experience rating of 86%. Among supermarkets, H-E-B, the top company in 2017, and Publix tied for second with a score of 83%.

Rounding out the top 10 scores among supermarkets for overall customer experience were Aldi and Wawa (82%), Trader Joe's and ShopRite (81%), Save-A-Lot and Food Lion (80%), Meijer, Kroger, Hy-Vee and Winn-Dixie (79%), Albertsons (78%), Safeway and Piggly Wiggly (77%), Stop and Shop (76%) and Vons (75%).

BJ's expands Instacart partnership

BJ's Wholesale Club, which has been marketing heavily to Sam's Club customers since the Walmart-owned company closed several stores, has expanded its same-day delivery agreement with Instacart and will soon offer the service from all 215 stores.

Instacart also recently expanded its partnership with Costco, Kroger and Aldi. According to Kroger, two-thirds of its customers now have access to delivery and/or curbside pickup.

Kohl's to add Aldi to stores in pilot program

Kohl's announced last week that it will bring Aldi into as many as 10 stores later this year in an attempt to increase customer traffic and store productivity. The specific stores were not released.

Earlier this year Kohl's CEO Kevin Mansell said the company had "a whole list of partners" ready to fill the space leftover from Kohl's recent efforts to rightsize its footprint. In addition to grocery stores, Mansell mentioned convenience stores and fitness centers as candidates.

Aldi, which continues to expand at a rapid pace, currently has 1,600 stores across 35 states. It plans to expand to 2,500 stores by 2022, which would make it the third largest grocer in the U.S. behind Walmart and Kroger.

Kroger - Ahold merger rumors have started

Last week the Cincinnati Business Courier reported that an analyst report out of Europe speculated that Kroger was pursuing a merger with Ahold Delhaize (Giant, Food Lion, Stop & Shop, Peapod, among others). On Wednesday of last week, Supermarket News reported that it was not able to verify the substance of the claim.

Analysts have talked about such a merger before, suggesting that the two powerful food retailers could gain additional scale and more effectively fight competitors like Walmart, Aldi and Amazon-Whole Foods. A merger would also provide Kroger with access to Peapod and its e-commerce platform.

As reported in Supermarket News, Ahold and Kroger have similar operating strategies in the U.S., both have invested in lower prices and have developed distinct private brands. Although the two companies compete in the Southeast, Ahold's Northeast store base would compliment Kroger's existing footprint.

ShopRite tops in New Jersey with 139 stores

A story on NJ.com last month listed the 10 biggest supermarket chains (by number of stores) in New Jersey. Here's the list.

ShopRite - 139 stores
Acme - 77
Stop & Shop - 61
Target - 44
Aldi - 42
Walmart - 29
BJ's Wholesale Club - 23
Kings Food Market - 23
Save-A-Lot - 22
Key Food - 22

Stores in New Jersey with fewer locations include Whole Foods, Trader Joe's, Wegmans, Weis Markets, and soon... Lidl.

Survey says millennials shop for groceries differently than the rest of us

According to a recent survey by the International Council of Shopping Centers, 99 percent of adults in the U.S. buy some or all of their groceries in person. Those surveyed cited immediate access to products and the ability to select fresh meat, dairy and produce as the top reasons.

The survey also revealed that 93 percent of adults shop for groceries at discount department stores (Walmart, Target), and 92 percent shop at traditional supermarkets . Sixty-nine percent of the people surveyed said they shop at limited assortment food stores (Aldi, Trader Joe's) and warehouse clubs.

Millennials revealed different shopping behaviors from all others. Seventy-four percent of them buy groceries from convenience stores, 67 percent from Amazon or other online retailers, and 66 percent from high-end supermarkets. Even when buying online, 81% of millennials go to the store to pick up their groceries.

Kroger scraps long-term growth targets, plans to invest in pricing and tech

Kroger announced earlier this month that it has scrapped the long-term earnings-per-share growth targets that it established in 2012. Rather, the company plans to invest in pricing and technology amid increased competition from Walmart and Amazon, as well as Aldi and Lidl.

"We are re-prioritizing and accelerating investments in our 'Customer 1st Strategy' in order to anticipate and meet rapidly evolving consumer demands to shop with us for anything, anytime, anywhere," said Kroger CEO Rodney McMullen. "Our transformation is all about redefining the customer experience."

Although the company will release more details at its next investor conference, McMullen revealed that Kroger plans to invest in a store-wide space optimization initiative to spur sales and growth, and would continue to make investments in price.

Aldi to add Instacart online shopping in select markets

Aldi announced Monday that it would begin offering online ordering and delivery later this month via Instacart in Atlanta, Dallas and Los Angeles, with "potential for future expansion."

Instacart currently serves nearly 40 markets in 25 states, and provides online ordering and delivery for companies like Whole Foods, Wegmans, Giant, and others.

Report predicts that traditional supermarkets will decline rapidly

A report released by Inmar predicts that nearly one in four traditional grocery stores won't be around in five years. Inmar is an analytics and technology-enabled service provider in the retail space.

The report concludes that dollar share for traditional supermarkets will continue to decline through 2021, while fresh, limited assortment and warehouse stores will gain in dollar share and store count over the same period. In addition, food e-commerce is projected to grow at a rapid pace.

According to the report, store counts will decrease over the next five years by nearly 25% from about 25,000 to 19,000, while dollar share for traditional supermarkets will decrease from 36.5% to 33.7%.

The drug store is the only other significant channel projected to see a decrease in dollar share (-0.6%).

Inmar predicts that e-commerce food sales will more than double by 2021, from $33 billion, or 4% of the current food and beverage market, to $70 billion, or 8% of the projected market.

Limited assortment stores like Aldi, Trader Joe's and Save-A-Lot will grow by more than 21% or nearly 1,000 stores over the next five years, while their dollar share increases from 3.1% to 4.4%, according to the report.

Walmart reacting to Lidl with aggressive pricing

Reports state that Walmart is reacting "quickly and aggressively" to Lidl's entry into the U.S. market. According to its website, Lidl now has 21 stores open in three states - North Carolina, South Carolina and Virginia - with plans in the next year for as many as 100 more in states from New Jersey to Georgia.

Since its first U.S. stores opened in June, Lidl has been hailed as the low price leader along with rival Aldi. But according to Rupesh Parikh, an analyst at Oppenheimer & Co., "Walmart is being really aggressive in terms of watching what Lidl, and presumably Aldi, are doing, and you can tell they are in a fight and not willing to give up customers."

"We found Walmart prices on like-for-like items were very compettive with both Lidl and Aldi," Parikh said.

Parikh also reported that several other retailers in current Lidl markets were reacting with lower prices, including Food Lion, Family Dollar, Dollar General and Target. The most aggressive pricing by all the food retailers has been in the private label category, which Parikh believes could lead to higher margins on other products in order to keep overall profits from falling.

Lidl's next U.S. market is likely to be Texas, where the German company recently opened a number of offices.

Kroger files suit against Lidl over private label concerns

Kroger filed a lawsuit against Lidl last month, claiming that in it's new U.S. stores, Lidl copied its Private Selection private label and was profiting from consumer confusion between the similar-sounding and similar-looking packages. In the lawsuit, Kroger sought a preliminary injunction that would prevent Lidl from selling its Preferred Selection products, as well as monetary damages.

After listening to testimony earlier this week from both parties, a judge ruled that the lawsuit would go to trial early next year, and that in the meantime, Lidl could continue offering its private label products.

In response to the suit, Lidl has argued that other Kroger competitors - including Safeway and Aldi - also incorporate versions of the word "Select" in their brands.

"The packaging, logo, and branding of the Lidl versions of these products - including pasta sauce, jam, ice cream, pizza, and cookies - is often more distinct from the Kroger offering than several of Kroger's other competitors," claimed a Lidl spokesperson.

Acme lowering prices

According to reports, Acme is advertising "thousands" of new lower prices in sales flyers released this morning. The price breaks come amidst the continued expansion of Aldi and ahead of Lidl's anticipated Greater Philadelphia store openings. Aldi is known as grocery's low price leader (lower than Walmart!), and reports indicate that Lidl's new stores in North Carolina and South Carolina feature prices on par with Aldi.

Acme's campaign is one of the first major shake-ups since Jim Perkins returned to his role as president. In Perkins' previous tenure as president, he used lower pricing to help turn the company around.

Sources have told Supermarket News that some of the A&P stores acquired by Acme in 2015 have not performed as well as expected.

Aldi to spend billions in new store growth

Aldi announced earlier this month that it would invest $3.4 billion to expand to 2,500 locations in the U.S. by the end of 2022. Currently Aldi has 1,600 locations and is in the midst of a $3 billion expansion effort to have 2,000 stores by the end of 2018.

If they reach 2,500 stores, Aldi would be the third largest grocery chain in the country. They would surpass Albertsons and trail only Walmart and Kroger.

A related but separate initiative was announced earlier this year to invest $1.6 billion in 1,300 store renovations.

Aldi's large capital investment comes at a time when they and American newcomer Lidl are touting themselves as trendy, less expensive alternatives to traditional grocery stores.