In an article posted yesterday, Monday, June 29 by Reuters, Nicole Maestri and Lisa Baertlein take a look at the rise of the dollar store in this tough economic environment. Particularly disturbing for traditional grocers is the assertion by customer Juan Bugueno that he “prefers the dollar store for staples like vegetables and eggs.”
The article goes on to quote, Richard Hastings, consumer strategist at Global Hunter Securities, who said that a private label strategy has its drawbacks.
“There’s the risk that the shopper could swap over to private label anywhere else … and buy private label at an entirely different company,” he said Dollar stores are happy to be that different company.
Grocers on defensive as dollar stores rise
SAN FRANCISCO/LOS ANGELES (Reuters) – When it comes to buying food, Juan Bugueno is shopping around and finding bargains in dollar stores, a worrisome trend for supermarkets.
Bugueno, 42, shops the Albertsons, Ralphs and Whole Foods grocery stores in his Venice, California, neighborhood — but prefers the dollar store for staples like vegetables and eggs.
“It’s cheap and it’s good,” said Bugueno, who among other things was buying bagged spinach and garlic at a busy 99 Cents Only Store (NDN.N) instead of at a Whole Foods next door.
In addition to heightened competition from top U.S. food seller Wal-Mart Stores Inc (WMT.N), grocers must also defend their turf against scrappy dollar stores that are using food to tempt shoppers like Bugueno, amid the recession.
Family Dollar Stores Inc (FDO.N) has added 200 new food products, like Triscuit crackers and Kraft salad dressing, while Dollar Tree Inc (DLTR.O) is installing freezers and coolers to sell ice cream, sandwich meat and frozen dinners.