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Low-end grocery stores carve out niche(Patriot-News, The (Harrisburg, PA) (KRT) Via Thomson Dialog NewsEdge) Oct. 13--The high-end supermarket isn't the only part of the grocery business growing in the Harrisburg area. German-owned Aldi Inc., a grocery chain that offers a limited assortment of low-priced products, will add a store near Carlisle in November and plans to open a store in February along Simpson Ferry Road in Lower Allen Twp. Analysts say limited-assortment grocery stores typically stock less than 2,000 items and generally carry more private-label brands than national brands in a no-frills environment. Shoppers at limited-assortment stores such as Aldi, Sharp Shopper in Lower Swatara Twp. and PriceRite in Susquehanna Twp. won't find rotisserie chicken, salad bars and take-home deli offerings. These stores usually are smaller than the industry average for supermarkets. While large supermarkets offer multiple brands and sizes of almost every item, a limited-assortment store has one or two brands or sizes and sometimes none at all, said Jeff Metzger, publisher of Food Trade News. Wilbur Siegrist, manager of Sharp Shopper, said the local store and five others in the Ephrata-based chain benefit from excess inventory put on the wholesale market for different reasons. "We buy surplus, close-outs, changes of packaging. A company will project sales, pad inventory and end up with extra product with an expiration date coming up. It's amazing what's out there to buy," Siegrist said. Sharp Shopper carries national as well as private label brands. It all depends on what's available. Shoppers routinely call to ask if certain items are in stock. Last week, Siegrist got a delivery of 89-ounce Simply Orange juice that he priced at $1.49 each. The orange juice would cost at least $2.50 anywhere else, he said. The juice containers carried an Oct. 23 sell-by date, which means it can't be sold after then, Siegrist said. Limited-assortment stores make up a fraction of the area grocery market but are increasing in number, as evidenced by Aldi. Jeff Baehr, vice president of Aldi's regional division in Frederick, Md., said the company locates stores where at least 35,000 people live within a three-mile radius. The company doesn't seek out areas with low-income residents, he said. "We don't target anybody in particular," Baehr said. "In today's economy more and more people are becoming concerned about the dollars they are spending on groceries, so we are gaining more customers who are concerned about the value." Shoppers who buy national brands pay higher prices to support advertising and marketing expenses, Baehr said. Private labels offer the same quality at a reduced cost, which Aldi passes on to consumers, he added. Prices at Aldi are 30 percent to 40 percent less than at supermarket chains such as Giant, Weis and Wegmans and about 20 percent lower than at Wal-Mart, Baehr said. Most items checked during a recent price comparison were cheaper at Aldi. At 99 cents, the price of an 18-ounce box of Millville-brand corn flakes was much less than at Wal-Mart, where an 18-ounce box of Kellogg's corn flakes was $2.18. But the Aldi price of $1.35 for a dozen large eggs was higher than at Wegmans, Giant, Wal-Mart, Karns and Weis. The market share of limited-assortment stores nationwide is 2 percent. But sales at limited-assortment stores increased 8.3 percent in 2006, and their market share is projected to grow to 2.5 percent by 2011, according to Williard Bishop, a consulting firm in Illinois. While small compared with the industry overall, Williard Bishop projects sales growth at limited-assortment stores between now and 2011 will be second in the industry only to the 170,000-square-foot-plus supercenters of the Wal-Mart and Target variety. Higher food prices are driving grocery shoppers to stores like Aldi and Sav-A-Lot, another limited-assortment chain. Siegrist said his Sharp Shopper store is having its best year since opening in 1993. "Food price inflation today is double a year ago and we expect it to go even higher over the next year or two," said Jon Hauptman, a partner in Williard Bishop. "Consumers are looking to stretch their shopping budget and are willing to trade a brand name for a strong price per ounce or price per pound, even if they aren't familiar with the brand." Tonya Weaver of Elizabethtown said she shops for her family at Sharp Shopper about twice a month. "The majority of things are pretty much cheaper. What we can't get here I pick up at a second store," Weaver said. Limited-assortment stores used to be located primarily in existing buildings in low-rent areas. Now, Hauptman sees more of those retailers moving into higher-income areas and building stores closer to suburbia. Aldi's Carlisle store was constructed recently in a suburban retail center. "Limited-assortment stores are much more socially acceptable to shop than in the past," Hauptman said. "We're not seeing that limited-assortment stores will become the channel of first choice, just that consumers are willing to shop a wider range of stores and formats looking for low prices. Very few will do the majority of their spending at a limited-assortment store, but an increasing percentage are doing some of their spending at a limited-assortment store." For example, Hauptman said shoppers can "work the system" by going to a discount chain and using the savings to reward themselves with "special indulgent products" from a place like Wegmans. "Even affluent consumers pride themselves on being smart grocery shoppers," Hauptman said. "There is room for both ends of the spectrum." To see more of The Patriot-News, or to subscribe to the newspaper, go to http://www.patriot-news.com. Copyright (c) 2007, The Patriot-News, Harrisburg, Pa. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |