Study finds that dollar store produce as good as supermarket produce

A study conducted by the University of Nevada Las Vegas (UNLV) concluded that the quality of fruit and vegetables at dollar stores is as good as the produce at conventional grocery stores. For the study, fruit and veggies at 14 dollar stores were compared in terms of color, cleanliness, freshness and firmness with produce at 40 traditional food retailers in the Las Vegas metro area.

"The dollar store fruits may be ripe - and you'll have to eat it soon - but it's completely good quality," according to UNLV Professor Courtney Coughenour.

The study also found that produce costs much less at dollar stores, although the variety offered at dollar stores was not as good. None of the dollar stores carried pears, for instance.

UNLV is hopeful that its findings will aid public health efforts to boost accessibility to affordable, nutritious food, since 17.3 million people in the U.S. live in "food deserts," which are defined as low income areas that are more than one mile from grocery stores.

Dollar stores continue to expand throughout the U.S., and the major chains continue to ramp up their selection of produce and refrigerated space.

Study shows that consumers still prefer visiting supermarkets for groceries

Despite all the hype around online ordering and delivery services, a recent study conducted by TABS Analytics found that conventional supermarkets and Walmart are overwhelmingly the top destinations for regular grocery shopping.

Of the 1,000 U.S. adults surveyed, 75% said traditional grocery stores were the retail venues they regularly visited to buy food and beverages (more than six times per month), and 57% cited Walmart.

However, compared to last year, 2% fewer people named supermarkets and Walmart as the places they regularly shop for food and beverages, and 2% - 4% more customers named dollar stores, drug stores and discount grocery stores. Target, Trader Joe's and Whole Foods saw gains as well.

Just one in six consumers said they regularly shopped online for groceries.

Dollar stores not being hurt by big retailer price wars

Despite analysts' fears that dollar stores could become collateral damage in the price wars being waged between big retailers like Walmart and Kroger, sales forecasts for Dollar General and Dollar Tree remain strong. Dollar General expects net sales to increase by five to seven percent for the year ending February 2, and Dollar Tree expects a similar increase for the year ending in January.

In contrast, Walmart and Kroger anticipate low single-digit growth.

"The big advantage that dollar stores have is that, given their store footprint and the real estate they need, they can exist in small towns where Walmart or supermarkets are not going to go," according to Euromonitor analyst Jared Koerten.

In an article last month, The New York Times said that dollar stores, which operate on razor-thin margins, are sprucing up stores, stocking more national brands, selling food and fresh produce, and opening more stores.

Moody's analyst Mickey Chadha added that "dollar stores... also offer home products, seasonal products, electronics, apparel and accessories that are higher margin."

Sales in non-traditional grocery formats up 3.1%, according to study

An annual survey conducted by Barrington, IL firm Willard Bishop revealed that sales within traditional grocery formats increased 1% to nearly $523 billion in 2013, while sales within non-traditional formats rose 3.1% to about $442 billion.

The market share for traditional formats decreased 0.5% to 46%, while the market share for non-traditional formats increased 0.4% to 39%.

In addition, the survey found that convenience store sales accounted for 15% of sales - up from 14.9% - with stores selling gas accounting for 12.8% of the total.

E-commerce sales for food and consumables, which are included in the non-traditional grocery category, rose 13.7% to $21.1 billion, and the report projects that e-commerce sales will grow at a rate of 9.5% per year through 2018.

Food sales growth:

Fresh formats - 10.4%
Dollar stores - 8.9%
Limited-assortment stores - 4.1%
Supercenters - 4%
Super warehouses - 3.5%
Small grocery stores - 2.4%
Convenience stores - 2.4%
Wholesale clubs - 2.3%
Drug stores - 1.4%

Family Dollar adding 400 food items to its grocery section

Family Dollar reported last week that it plans to add more than 400 new food items to its grocery section and reduce prices on 1,000 other items as it seeks to increase store traffic and sales.

Family Dollar currently operates about 8,100 stores, and customers across the country (like myself) still think the following dollar store dialog is funny:

Customer: How much does this item cost?
Cashier: A dollar.
Customer: How about this item?
Cashier: A dollar.
Customer: Is this one a dollar?
Cashier: Yes.
Customer: How much is...
Cashier: A dollar!

Walmart Neighborhood Market may accelerate its rollout

Earlier this month Walmart CEO Bill Simon said the company could accelerate the rollout of its Neighborhood Market grocery stores. According to Simon, Walmart had plans to open 80-100 Neighborhood Market stores this year and next, but that number could increase as returns on newly built stores approach those of its supercenter format.

"Neighborhood Market is a really cool format," said Simon. "It's a grocery store combined with a drug store put in a place where a dollar store would be."

And just to scare grocery stores, drug stores and dollar stores a little more, Simon kept talking.

"Imagine a drug store that has Walmart's prices that has fresh food, fresh produce and fresh meat. Imagine a convenience store that has pharmacy and fresh food. Imagine a grocery store that also has a pharmacy and, in many cases, gas, and the prices Walmart has. It just really works well against any competitive set it operates against."

Simon and the company he runs have a lot in common. They both lack eloquence, but make alot of money!

Walmart less threatening to supermarkets than it used to be

Supermarket News asks food retailers every year "which alternative channel has posed the biggest threat to Center Store sales in supermarkets?" Walmart has consistently remained the top threat, but the fear they put into supermarket competitors is obviously diminishing.

In 2009, 64% of respondents listed Walmart as the number one threat. In 2010, 50% of respondents answered the same way, and last year, the percentage fell to 45.3%. In the most recent survey, Walmart's total fell to 34%.

Dollar stores have emerged as a significant threat to supermarkets, as 22.6% of respondents listed them in the top spot. Last year dollar stores received only 17% of the votes.

Club stores (Costco, BJ's) and limited assortment discounters (Save-A-Lot, Aldi) finished third and fourth, respectively.

"Hundreds" of Bottom Dollar stores in the pipeline

Bottom Dollar's parent company, Delhaize Group (Food Lion, Hannaford Bros.), said yesterday it is looking to add 450 new discount grocery stores worldwide over the next five years, "hundreds" of which would be in the U.S.

According to Company CEO Pierre Oliver Beckers, the plan for new stores represents an acceleration of previous forecasts and will help accelerate sales growth by 5% - 7% in the next three years.

According to Bottom Dollar's website, there are currently 23 stores in Pennsylvania and five stores in New Jersey, and the company has recently reported that 14 new stores are scheduled to open in the Greater Pittsburgh area next year. Bottom Dollar competes in the crowded grocery space with Save-A-Lot, Aldi, Walmart and the various dollar stores, not to mention traditional supermarkets and drug stores.

Walmart calling on experts to keep their shelves stocked

Not only is Walmart suffering from declining sales, but they are also having trouble keeping their shelves stocked in an efficient manner. A Bloomberg News story last week reported that the world's largest retailer has hired consultants to "walk the aisles and track whether hundreds of items are in stock."

A combination of more products (the return of about 8,500 items in an effort to boost their competitiveness) and reduced labor hours has created a logjam in storage areas, so much so that an industry expert says some items meant for bare shelves may actually be misplaced in the back room. Although a Walmart spokesperson claimed last week that the company's in-stock levels are at historical highs, one Walmart supplier thinks they are worse today than in the past. The supplier said that during the summer less than 90 percent of items in a typical basket of goods were available for shoppers.

Problems stocking the shelves must be an embarrassing issue for Walmart, which attributes much of its success to superior supply chain practices. Factor in their nine consecutive quarters of declining same-store sales, caused in part by competition from Aldi, dollar stores and Amazon, and the retail giant needs some good news to report.

Family Dollar plans 450-500 new stores in 2012

Family Dollar, which operates over 7,000 stores nationwide, said it plans to open 450 - 500 new stores in fiscal 2012. The Charlotte, NC-based company posted a strong profit in its most recent quarter and cited high demand for food and other essentials as big factors in both its quarterly results and future growth plans.

Analysts say that dollar stores like Family Dollar, Dollar Tree and Dollar General have been taking customers from Wal-Mart by offering name-brand items at lower prices, even though customers may pay more per ounce than they would when buying larger packs at major chain stores.

Wal-Mart has posted nine consecutive quarters of declining same-store sales and is fighting to win back customers lost to dollar and discount stores.

The Lehigh Valley grocery scene continues to evolve

One might think that a drive up north to the Lehigh Valley would alleviate the grocery schizophrenia we experience in the Philadelphia market. Not so. Apparently, Lehigh Valley consumers need a scorecard - not to mention a pencil with a good eraser - to keep track of the industry players and their comings and goings.

Coming:

• Bottom Dollar currently has four locations in The Valley, and may have as many as seven in the next year.
• Weis Markets has increased its budget for adding and updating stores, according to a company spokesperson. The grocer currently has 14 locations in The Valley and will soon have 16, second only to Giant.
• Giant, with 17 locations in The Valley, has been spending money on renovations at a number of area stores.
• A ShopRite is proposed in Trexlertown, along with a Target and BJ's. 
• Walmart is a major player in the area, of course, and the Whitehall location will soon become a Supercenter and include a full-service grocery store.
• Three of the four Target stores in The Valley include a Fresh Grocery section.
• Dollar stores and drug stores continue to expand their grocery selections.

Going:

• Pathmark shut its location in Lower Saucon, which is causing residents and reporters to speculate as to who will take over the space.
• Wine kiosks - Wegmans is pulling PLCB wine kiosks from all its Pennsylvania stores, including Allentown, Bethlehem and Easton, the three major cities in the Lehigh Valley (also known as A-B-E).

As always, I'm afraid something may have changed since I started writing this blog post.

Walmart still feared by supermarkets, but not as much as last year

Every year Supermarket News asks supermarket operators which competitors they fear the most. Walmart remains the top choice, but their fear factor is waning. In 2009, 64% of all respondents identified Walmart as their biggest threat. That percentage decreased to 50% last year and 45.3% this year.

Dollar stores (17%) were identified as the second most feared competitor, followed by club formats (15.1%) and limited-assortment discounters (3.8%).

The Supermarket News story quoted one respondent, who described the growing respect for dollar stores. "Walmart has been a threat for more than two decades, but the last year saw much more activity in the dollar stores when it came to Center Store items. Dollar stores have added cereal, canned goods, dairy and other items traditionally purchased in grocery stores."

Dollar General sued by supermarket chain over food offering

Winn-Dixie claims that Dollar General is breaking restrictive lease covenants by selling too many food items in more than 100 shopping centers where Winn-Dixie is the anchor tenant, according to a suit filed in U.S. District Court in West Palm Beach, FL.

Winn-Dixie says Dollar General is knowingly violating non-compete provisions of its leases, and Dollar General disagrees and plans a rigorous defense.

The grocery industry will be watching this case closely, as there are thousands of leases with similar clauses in favor of supermarket anchors.

Source: Supermarket News