Delhaize Offers Bottom Dollar Deals in Pittsburgh
Limited assortment grocery stores such as Aldi and Save-A-Lot have been on a growth tear in recent years as consumers go in search of extreme savings in tough times.
Delhaize has an answer to this challenge to traditional grocer retailing in the form of its own Bottom Dollar Food. It has opened seven new locations in the Pittsburgh and Youngstown, OH markets and plans to open seven others.
"Customers will find Bottom Dollar Food unique because we offer unbelievably low prices, carry quality private brands and the national brands that matter most, and offer a meaningful, efficient assortment of fresh produce and meat," said Meg Ham, president of the chain in a press release.
While Bottom Dollar boasts of the types of savings found in other limited assortment grocery stores, it sees its emphasis on fresh food as a point of difference.
Leslie Atkinson, director of marketing for Bottom Dollar Food, told the Pittsburgh Post-Gazette, "There was a huge opportunity in the discount sector to have fresh produce."
With the addition of 14 new units, Bottom Dollar will grow to over 40 stores in New Jersey, Pennsylvania and Ohio.
Discussion Questions
Discussion Questions: Will we see continued rapid growth of limited assortment grocery stores across the U.S.? How does the Bottom Dollar Food model compare to others such as Aldi and Save-A-Lot?
As long as I’ve been involved with the food industry — which sometimes seems like it’s been since the Neolithic Era — pundits have been reassuring me there was no future in limited assortment stores — and yet they have continued to flourish over all those years! So I see this more as a continued extension of a long-term trend rather than “rapid growth” which by the way is hardly how I would characterize the opening of 14 stores.
I haven’t seen the stores, but the Devil is, as always, in the details, so the quality of the produce items will be critical to understanding the format’s future.
The “growth tear” reference, as a point of clarification, was for the limited assortment grocery vertical including Aldi and Save-A-Lot. Those chains have each increased store openings in recent years.
Limited assortment stores do not need the large footprint of the normal or big-box stores. As a result, they can fit in spaces closer to neighborhoods. The challenge is to identify the proper assortment that will appeal to that neighborhood while maintaining cost efficiencies for running the store. If there is a way to profitably manage the paradox, these stores will continue to appear.
This is another example of the terrible economy in most parts of the USA, and these stores do well, especially first of the month. Full service supermarkets have a tough time with these competitors, and the Dollar Stores are clones without the meats. If and when things get better, there will be a shakeout, and until then, Bottom Dollar and the clones are here to stay.
A gallon of milk is a gallon of milk. Conventional wisdom says that the customer will travel the shortest distance to get it…but increasingly he/she is willing to travel farther to save more. You can bet that the grocery industry is watching to see how JCP’s moves pay off.
I recall a few years ago A&P came out with their Food Basics format. Jewel with their Jewel T stores. Fleming with YesLess. When you say you have “unbelievably low prices” you better mean that you are lower than Aldi and most certainly lower than Walmart. I saw a Save-A-Lot get nearly cut in half in Youngstown when Walmart opened across the parking lot. However Aldi actually went up in volume because Aldi has lower prices than both Save-A-Lot and Walmart and Walmrt brings the traffic.
Am I being too much of a skeptic here? Why doesn’t Delhaize simply drop the prices in their failing formats to “Bottom Dollar” pricing? The answer is they can’t. This is looking very A&P-esque for Delhaize to moving to the home base territory of Giant Eagle. Better operators than Delhaize have tried to take a swipe at Giant Eagle on their home court and they failed. I don’t have a lot of confidence in a chain that consistently turns out low sales per square foot results.
These stores should do well, but they may be late to the game. The benefit of this approach is lower prices on common items and more convenience because of their smaller size and ability to fit into neighborhoods. The challenge will be the already established and growing Dollar store format and Walmart’s new smaller store format now being tested in Chicago.
What Bottom Dollar Foods needs is a hook. Aldi has the 25 cent carts and bring your own bag, Trader Joe’s owns customer experience and quality Private Label, Dollar Stores are a treasure hunt of really inexpensive stuff.
What will Bottom Dollar Food be known for?
Delhaize has much on their plate right now. Closing stores, eliminating a Bloom banner in which they had a tremendous amount of sweat equity, repositioning Food Lion back to a “low price” with more service operation (good luck with that), and fostering growth in new markets with Bottom Dollar…whew. Dealing with any one of these initiatives would be a handful, but executing all of these simultaneously will be a challenge to even the very best management team.
I have the same concern that was posed by David Livingston, that is for Bottom Dollar to have a lasting impact they must have “unbelievably low prices,” and maintain those despite margin pressures that may come from their Bottom Dollar’s operational expenses or even those from the mother ship, Food Lion.
If they have done their homework correctly and have chosen good locations with the right demography and accurate competitive assessment, they should have a good chance to succeed. But we all know that among all the major elements of competitive differentiation, the “lowest price” position is the toughest one to execute, unless you have the efficiencies, the economies of scale, and the true commitment to that position.
There was an old song that pleaded, “Oh, give me something to remember you by….” It seems like a great many food merchandisers feel like that’s the thing consumers want to remember them by today is lower upon lower prices. So growth will continue for limited assortment stores.
Meanwhile, the higher-end and boutique food retailers will uniquely try to build profitably by operating with a paradigm of panache that hopefully will provide some psychic income for their customers.
As long as retailers continue to “hide” the few items shoppers want, and BUY most, in indiscriminate walls of merchandise, there will be HUGE opportunities in limited selections stores. Then, these stores will ALWAYS begin adding SKUs because a wider selection will ATTRACT more shoppers, even though they may not add enough additional sales for those individual SKUs to justify those individual SKUs. I’m waiting for the first major retailer to catch on, but it’s not with bated breath. 😉
Product and price are key drivers in the retail grocery category. This venue for Delhaize should return greater sales revenues in a reasonable amount of time. However, the true key to this will be how customer service is managed in this environment. Consumers still demand excellent customer service, even from a deep discounter!