Supermarkets Get New Competition from Dollar Stores

Guest post from our friends at Spots 'n Dots

 

Running a supermarket has always been a low-margin business. Chains made money through volume more than pricing. But now the dollar store is becoming a real threat

to both the traffic and the margin, says a new survey from Perception Research Services International (PRS).

Make no mistake, supermarkets still sell the majority of groceries in the U.S. The PRS  survey finds that 91% of shoppers bought groceries in a supermarket in the last three months--about the same as last year’s 92% in a similar survey. And mass merchandisers like Walmart and Target, are still the supermarkets’ biggest competitors, with 73% of survey participants shopping for groceries there in the last three months (down from 76% in 2011).

But the number of persons who bought groceries at a dollar store has risen to 35% this year, up from the already surprising 32% in 2011.Levels of grocery shopping at drug stores (46% compared to last year’s 47%) and convenience stores (23%/24%) have held relatively steady since last year.

While grocery stores still are preferred for perishables and food stuffs, dollar stores are favored for things like cleaning supplies and personal care items. According to the PRS survey, during 2012, more shoppers utilized sales/coupons (83%) and quantity/size

control (70%) to save money than in 2011. And in keeping with what we have been reporting, this year significantly more shoppers claimed to have switched brands to curb

costs (61% vs. 49%). 

All those cost-cutting, price-conscious measures have meant that supermarkets have had to cut their own prices to the bone over the last year to keep up. And many, like Kroger, are emphasizing customer service, an advantage they have over dollar stores. "Our latest findings on grocery shopping indicate how very discerning today's shoppers are – about their venue preferences as well as brand choices," said Jonathan Asher, EVP at PRS.

"Retailers must understand their competitive strengths and capitalize on them, while also making the necessary adjustments to their offerings to seize opportunities for a larger slice of the pie as shoppers are more open to new shopping possibilities than they have

been since the 1950's with the advent of large, supermarket chains."

News From Auto, Jewelry, Retail and More...

Guest Blog Post by Spots 'n Dots, The Daily News of TV Sales

Fifteen years ago, Cadillac was the top-selling luxury vehicle in the U.S. and it wants that title back. General Motors intends to double the brand’s U.S. sales volume to 294,000 within the next couple of years. To do that it will introduce 10 all-new or significantly updated vehicles within the next three years, Don Butler, Cadillac's vice president of marketing told the Wall Street Journal. The brand has a steep climb ahead of it. According to the WSJ, Cadillac sold 76,229 vehicles in the U.S. in the first seven months of 2012, behind Lexus

at 126,367; BMW at 147,801 and Mercedes with 159,412......For the quarter ended July 31, Zale Corp., operator of Zales Jewelers, Gordon's Jewelers and other jewelry stores, reported a loss of $19.7 million. Sounds bad, but that’s about half of the loss of a year earlier. Revenues rose 7.9% and same store sales were up a very healthy 8.3%--the seventh straight quarter of growth in that category......

It’s expected that U.S. regulators will loosen restrictions on advertising by hedge funds this week and Reuters says many are beginning to look at whether and what kinds of advertising they should do. Michael Mahaffy, CEO of Point Capital Aligned Wealth LLC, a hedge fund that launched earlier this year says, "We are looking to raise money, and the ability to source new investors that are beyond our traditional networks is appealing." Other funds like Whitebox Advisors LLC, Minneapolis, will be looking to establish their brand as a leader in the industry. "I am hellbent on creating a global brand and the only way to do that is through advertising," Anthony Scaramucci of fund of hedge funds SkyBridge Capital, told the Wall Street Journal.......

The very promotional JoS A. Bank Clothiers saw its second quarter revenues rose 12.9% and same store sales jump 6.1%. Online and catalog sales were up 39.3%. The company sees the potential for 800 stores and will open 50 this year and next.

McDonald's Still Dominates Fast Food...

A Guest Post from Spots ‘n Dots, The Daily News of TV Sales

...BUT CHICK-FIL-A MAKES MORE MONEY PER UNIT
It’s not surprising that McDonald’s stands above the rest of the quick serve restaurant industry like a Colossus. It has more units than any chain except Subway (14,098 for McDonald’s vs. 24,722 for Subway) and brings in three times more revenues each year than Subway, its closest competitor ($34 billion vs. $11 billion). But there is a category in which it falls short, at least it did in 2011. Its revenues per store were 2.5 million, very good for the industry, but behind the $2.893 million brought in by every Chick-fil-A restaurant--and that chain does not even open on Sundays! Subway makes only $469,000 per store per year.

QSR Magazine takes the pulse of the quick serve industry each year and publishes a breakdown of the 50 top chains. As noted above, Mickey D’s and Subway were on top for last year. Beyond those two chains, the list gives a pretty good snapshot of those brands that were growing and those that were not, at least last year.

For instance, Starbucks, with 10,821 locations, $9.75 billion in revenues and $1.14 million in revenues per store, actually lost 310 locations in 2011. Wendy’s and Burger King were numbers 4 and 5 on the list, having switched positions from the year before. Both trailed McDonald’s in every category. Wendy’s brought in $8.5 billion in 2011, it had 6,594 locations and averaged $1.456 million in revenues per store. BK’s 2011 revenues were $8.4 billion, from 7,231 locations with a take of $1.248 million per store. Burger King has seen a bit of a renaissance this year, but in 2011 it closed 33 units while Wendy’s was opening 18. Taco Bell had fewer locations that BK, 5,670--36 more than in 2010--but it took in more revenues per store, $1.284 million, for a total take of $7 billion in 2011. Also making the top ten for 2011 were Dunkin’ Donuts ($6.5 billion in revenues, $850,000 per store, 7,015 locations, +115 units in 2011); Pizza Hut ($5.5 billion, $875,000, 7,600, +58); KFC ($4.5 billion, $949,000, 4,780 locations, -275 units); and Chick-fil-A ($4.051 billion, $2.893 million, 1,606 locations, + 69 units).

In the top 50, Little Caesars (#23, $1.48 billion, $465,000 per unit) added the most new locations--305--followed by Five Guys Burgers & Fries (#25, $950 million, $1.156 million) with 182. Quiznos (#26, $921 million, $345,000 per store) closed the most units, 334, between 2010 and 2011.