Inside This Issue - News
New grocery options
December 19th, 2011
NEW YORK – Value conscious shoppers, a population whose ranks have swelled in recent years, are about to get more options regarding where to buy their groceries.
Dollar General Corp., for example, plans to restart its food market concept, which targets food deserts with an expanded dollar store format that also features an assortment of groceries, including frozen food, dairy, meat and produce.
Delhaize Group, meanwhile, plans to make its discount grocery concepts, including Bottom Dollar Food in the United States and Red Market in Europe, the focus of a ramped-up expansion program. The company plans to open 450 stores worldwide in the next three years.
"We are confident that our group will be able to seize the many opportunities that come with the challenging environment we operate in," Delhaize president and chief executive officer Pierre-Olivier Beckers said at a recent analyst meeting. "While we continue to be focused on the disciplined execution of the many projects that are ongoing, we are ready to accelerate our store-opening plans."
Those plans include opening hundreds of Bottom Dollar stores during the next five years, the company says. Bottom Dollar currently operates 53 stores in five states (Maryland, North Carolina, New Jersey, Virginia and Pennsylvania). Most recently the chain moved into the Philadelphia market, where it expects to have 29 stores by year-end. Beckers cited encouraging results in that market as part of the rationale for opening additional stores in other markets that have the same growth profile. Next up is Pittsburgh, where Bottom Dollar plans to open 14 stores in the first quarter of 2012.
Delhaize says the strategic rationale for its choice of Bottom Dollar as its main expansion vehicle is the fact that the value segment, which includes such retailers as Aldi, Walmart and Dollar General, is the fastest-growing part of the grocery retailing business. Such retailers accounted for 33% of all grocery sales in 2009, up from 28% in 2003. That share is expected to reach 37% in 2014. The segment’s compound annual growth rate is about 3.9%, while that of conventional grocery stores is just 1.2%.
Dollar General sees room for growth as part of that trend as well. The company currently has 62 Dollar General Market stores in nine states, and plans to add 40 more in 2012.
"In the fourth quarter we plan to replace six traditional stores with Dollar General Markets in areas where we believe we can serve our customers even better with our fresh meat, produce and expanded cooler assortment," chairman and chief executive officer Rick Dreiling said during a third quarter conference call. "We believe the DG Market concept is well positioned to serve food deserts in both rural and metro areas and reinforces Dollar General’s heritage of serving the underserved."
The new food stores will be part of a larger growth plan that calls for 625 new outlets next year.
Dollar stores have become a mainstream part of the American shopping experience, according to a new white paper — "Dollar Days: How Dollar Stores are Growing in a Weak Economy" — from Colliers International.
"The rapid evaporation of wealth (both real and perceived) has profoundly changed the way Americans shop and how they define value," said Ann Natunewicz, national manager for U.S. retail research for Colliers International. "Dollar stores now serve a larger consumer base, which is fueling unprecedented growth in dollar store leasing and a significant shift in the types of retail space they take."