Whole Foods taking a small bite out of Trader Joe's traffic

In the past year, Whole Foods has increased foot traffic at the expense of Trader Joe's, Walgreen's and Dollar Tree, according to Sense360, a California-based company that tracks location data from millions of smartphone users. The data covers Whole Foods locations that are within a mile of competing stores.

In addition, the number of shoppers who visited a Whole Foods at least six times in the past year increased to 11 percent in August as compared to 9 percent a year earlier, according to surveys by consumer products research company Tabs Analytics.

As for the competition for grocery dollars between Amazon / Whole Foods and Walmart, a former Amazon executive said that Amazon is "willing to experiment and be totally misunderstood for long periods of time. Walmart is built to deliver pallets to 4,000 stores and Amazon is built to deliver packages to millions of homes. Who do you want to bet on: the pallet people or the package people?"

Dollar stores continue to increase food and beverage offerings

A story in Supermarket News earlier this month reports that Dollar General and Dollar Tree are pushing ahead with plans to increase their food and beverage offerings.

Dollar General

Dollar General reported that consumable sales rose significantly in the quarter ending May 4, which helped the company fuel a gain in total sales as well as same-store sales compared to the same quarter a year ago.

"We recently launched a better-for-you offering intended to provide our customers with healthier consumable options at affordable prices," said Dollar General CEO Todd Vasos. "Over time, we expect this offering to include more than 130 products."

Vasos also said the company will roll out Good & Smart, a new private label that will represent about 75% of the better-for-you product portfolio.

Furthermore, Dollar General plans to remodel locations with fewer than 12 cooler doors, as Vasos anticipates that the entire store base will have an average of 20 cooler doors by the end of fiscal 2018 (up from an average of 10 cooler doors in 2012).

The company plans to open 900 new stores this fiscal year, remodel 1,000 mature stores and relocate about 100 stores. Dollar General has nearly 15,000 stores in 44 states.

Dollar Tree

Dollar Tree President and CEO Gary Philbin reported that the company plans to expand its Snack Zone concept, which is designed to provide customers with an assortment of consumption products at the dollar price point to drive incremental sales.

The chain added Snack Zones to 214 stores in the most recent quarter, and plans to bring it to 750 more stores in fiscal 2018.

"Our customers are excited with the introduction of the Snack Zone - great values across categories of cold beverages, candy and snack cakes, salty treats and other favorites that bring our customers back to those treats they crave," explained Philbin.

At Dollar Tree's Family Dollar stores, consumables have been a focus in store remodels. Remodeled stores have expanded beverage and snack stands, and an added assortment of food in coolers and freezers.

Dollar Tree has nearly 15,000 stores (Dollar Tree and Family Dollar combined).

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."

Eight US companies make "world's fastest growing retailers" list

Recently 24/7 Wall St. analyzed data from the National Retail Federation and released a "World's 25 Fastest Growing Retailers" list. Eight U.S.-based retailers made the cut, three of which are grocers.

Here are the eight American companies on the list:

• Albertsons Companies (5-year annual growth: 74.1%)
• Sprouts Farmers Market (47.4%)
• Southeastern Grocers - BI-LO, Harveys, Winn-Dixie, Fresco y Mas (34.6%)
• Apple/Apple Retail Stores (23.4%)
• NIKE/Direct-to-Consumer (22.3%)
• Ulta (22.1%)
• Dollar Tree (21.4%)
• Amazon (20.8%)

Dollar Tree adds 8 Philly area stores

Dollar Tree announced earlier this month that it plans to open eight new stores in Philadelphia and the Pennsylvania suburbs. The new stores are in the following locations.

Bensalem, PA
Fairless Hills, PA
Levittown, PA
Southampton, PA
Chester, PA
Woodlyn, PA
Philadelphia, PA (Morrell Ave.)
Philadelphia, PA (Broad St.)

The company has been in expansion mode ever since it finalized its deal last year to purchase Family Dollar.

Dollar Tree to sell 330 stores

Dollar Tree announced last month that it will sell 330 stores to private equity firm Sycamore Partners, which will operate the stores under the Dollar Express banner. Dollar Express was a Philadelphia-based company that was acquired by Dollar Tree in 2000.

The sale addresses regulatory concerns brought about by the planned merger between Dollar Tree and Family Dollar. The combined Dollar Tree - Family Dollar company will consist of approximately 13,000 stores and create the largest retailer in the dollar store sector.

Dollar General plans for aggressive expansion

Dollar General announced in March that it achieved record results and plans to accelerate its store expansion plan by opening 730 new stores in 2015 and remodeling 875 others. The company opened 700 news stores in 2014.

The announcement came shortly after Dollar General's failed attempt to acquire Family Dollar, with whom Dollar Tree reached an agreement to merge.

Dollar General's sales increased 8% to $18.9 billion in 2014, and same store sales increased 2.8%. Net income increased to $1.065 billion, compared to $1.025 billion in the prior year.

Family Dollar approves deal with Dollar Tree

It was announced this morning that Family Dollar shareholders approved the proposed $8.5 billion merger with Dollar Tree, ending months of speculation over whether Dollar Tree or Dollar General would merge with Family Dollar.

According to reports, the combined companies will operate more than 13,000 stores in 48 states and Canada, with sales of more than $18 billion.

As previously reported (and blogged about: Family Dollar rejects Dollar General's higher offer, to pursue deal with Dollar Tree; and Dollar General not giving up on Family Dollar acquisition), Dollar General offered $9.7 billion, but in order to approve such a deal, the Federal Trade Commission would require about 4,000 store divestitures, compared to about 300 for the deal approved today.

After Family Dollar twice delayed the shareholder vote, Dollar Tree threatened to walk away from its offer if the deal wasn't approved this week.

The companies expect the deal to close as early as March. Dollar Tree CEO Bob Sasser will lead the merged company, with Family Dollar CEO Howard Levine reporting to Sasser.

Dollar General may be out of the bidding for Family Dollar

It was reported earlier this week that analysts believe Dollar General may be dropping its bid for Family Dollar. The reason cited is the Federal Trade Commission's requirement for up to 4,000 store divestitures as a result of a deal between the two companies. A deal between Family Dollar and Dollar Tree would require only about 310 store closures.

According to Family Dollar Chairman and CEO Howard Levine, "The Family Dollar board of directors continues to be of the unanimous view that the current Dollar General proposal is not reasonably likely to be completed on the terms proposed."

Given that Dollar General hasn't increased its store divestiture commitment or its purchase price, one analyst concludes that they are effectively bowing out of the process.

 

Dollar General not giving up on Family Dollar acquisition

Dollar General CEO Rick Dreiling said earlier this month that his company remains committed to acquiring Family Dollar, who has already agreed to be purchased by Dollar Tree, pending government approval. (See Family Dollar rejects Dollar General's higher offer, to pursue deal with Dollar Tree.)

Dreiling said Dollar General expects to provide Family Dollar shareholders with an update on its offer prior to Family Dollar's December 23 shareholder meeting.

According to an industry analyst cited in a Supermarket News story, "From an economic perspective, Dollar General has room to raise its bid, although unless it has very good visibility on the Federal Trade Commission's thinking on store divestitures, there would likely be a limit beyond which it could go."

Over the summer, Dollar Tree offered $8.5 billion for Family Dollar Stores, which was followed by Dollar General's $9.2 billion cash offer. Family Dollar chose to pursue the Dollar Tree bid, stating that "a transaction with Dollar General has a high likelihood of not closing due to antitrust considerations."

Family Dollar rejects Dollar General's higher offer, to pursue deal with Dollar Tree

Last week I blogged about Dollar Tree's $8.5 billion deal for Family Dollar Stores, which was followed by Dollar General's $9.2 billion cash offer for the same company. A few days ago Family Dollar rejected the higher offer and said it will pursue its prior agreement with Dollar Tree, citing antitrust considerations.

Dollar General said it would be willing to divest up to 700 stores to make the merger with Family Dollar feasible, but Dollar General said it "will not jeopordize the Dollar Tree deal for a transaction with Dollar General that has a high likelihood of not closing due to antitrust considerations."

According to experts and analysts, the saga isn't over, as they believe Dollar General may have expected the negative response and may even be preparing to increase their offer, an offer that could top $10 billion.

Dollar General and Dollar Tree fighting for Family Dollar Stores

In late July it was announced that Dollar Tree would buy competitor Family Dollar Stores in a cash and stock deal worth $9.2 billion, and that both companies unanimously approved the merger. However, reports today said that Dollar General offered $9.7 billion in cash for Family Dollar.

Today's move by the top dollar store in the U.S. is widely seen as a defensive move, as a Family Dollar - Dollar Tree combo would represent a long term market share threat. However, some analysts expect Dollar Tree to make a counteroffer, since the acquisition would do more to transform Dollar Tree's business than it would for Dollar General, which is more similar to Family Dollar.

According to a Bloomberg story, the combined Dollar General - Family Dollar company would need to sell as many as 700 stores to gain antitrust approval. Still, the result would be about 20,000 locations, making it the nation's largest retail chain in terms of locations.

Currently, Dollar General is the largest dollar store chain, followed by Family Dollar and Dollar Tree. 

Dollar Tree continues to add coolers, ramp up competition with food stores

Dollar Tree said last month that it would add coolers for frozen and refrigerated foods to 550 stores this year, which is more than it has ever added in one year. Coolers were added to 215 stores in the company's second fiscal quarter, and it now has coolers in nearly 3,000 of its 4,842 locations.

Coolers in dollar stores are significant, of course, as it allows them to increase the amount of grocery items they carry, and allows them to compete head to head with traditional supermarkets, discount grocers and other retailers that sell food.

Net income for Dollar Tree in the second quarter rose 4.6% to $124.7 million on sales of $1.85 billion.

Dollar Tree reports sales increase; won't add tobacco

Dollar Tree announced last week that its net earnings improved by 10.2% in the fourth quarter as compared to the same period a year ago. A 15.4% sales increase was a major factor, along with a slight improvement in margins and an extra week in the quarter. Comparable-store sales for the quarter increased 2.4%.

In addition, Dollar Tree announced that unlike Dollar General and Family Dollar, it would not roll out tobacco in its stores. Instead the company will add frozen and refrigerated foods to another 475 stores in 2013.

For the full fiscal year that ended on February 2, Dollar Tree's sales improved 11.5% to $7.4 billion, and net income increased 8.4% to $619.3 million.

Dollar Tree adds pharmacy to FL store

Dollar General has a grocery concept, and now Dollar Tree has a store with a pharmacy. Dollar Tree recently contracted with an independent pharmacy based in Boca Raton, FL, to add a location inside a Deals stores in West Park, FL. (Deals is a Dollar Tree variety store concept.)

Although there are people who have doubts that consumers will trust a dollar store for their prescription drug needs, the concept may very well succeed if it competes well in the areas of price and convenience. These two factors have been driving sales up at dollar stores for some time now as they successfully compete with Walmart and traditional supermarkets.

Number of dollar stores surpasses number of drugstores in the U.S.

A new report from Colliers International says the U.S. now has more dollar stores than drugstores. The four big national dollar store chains - Dollar General, Dollar Tree, Family Dollar and 99 Cents Only - have approximately 21,500 locations. The three big drugstore chains - Walgreens, CVS and Rite Aid - have approximately 19,700 locations.

According to the report, the recession led consumers to dollar stores instead of drugstores and supermarkets. In addition, dollar stores are often willing to go in small markets, where a big supermarket or drug store (which often has "onerous real estate requirements") may not be willing to go.

The Colliers report says all four dollar store chains are expected to continue adding stores throughout 2012.

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.