Category Archives: Retail Food Prices

Gambling Machines Among Latest ‘Added Values’ Items In US Supermarkets

video gambling machines

Generally speaking, grocers aren’t gamblers: Traditionally, they’ve tended to hew to fairly traditional approaches to marketing and selling food. At least they did until a few years ago.

Then, faced with new competitor types – such as hard discounters such as Aldi and Sav-A-Lot (and now, Lidl) – and an increasing emphasis on store periphery departments, retailers started stepping up their game, expanding their offerings and, most recently, paring prices to the bone.

A growing number, including New York State-based Wegman’s, and Connecticut-based Stew Leonard’s, added an entertainment factor by bringing ‘backroom’ business to the store floor: Putting in-store baking operations front-and-center; providing a window into juice- and milk-bottling operations (Stew Leonard was a pioneer in this); taking sampling to a new level with educated offerings of featured wines … the list goes on.

But following at least two other Illinois grocers in truly breaking new ground recently was a Piggly Wiggly store in Antioch, where several video gambling machines were introduced. Store owner David Karczewski told the local Daily Herald newspaper that while the machines hadn’t been part of his original plan when he applied for a license to sell alcohol within his store, he quickly realized that the liquor permit, which also allowed him to introduce video gambling into his grocery store, sounded like a good idea.

He’s subsequently said he’s been proved right: He told the Daily Herald that they’ve earned him a number of new customers.

Hardly surprisingly, some community members have objected to the presence of gambling machines in a family-focused establishment, while town board members say allowing gambling wasn’t their intention in approving the store’s liquor license. Store owner Karczewski, meanwhile, said he installed the machines to give his location a competitive edge against larger competitors, and he’s been pleased with the many new shoppers he’s seen in the store.

His innovation, Food Dive noted a few days ago, isn’t all that different from other food retailers’ innovative efforts to attract new customers, or, at the least, new income from existing ones. (Banking, parcel shipping, Coinstar machines and even the occasional Department of Motor Vehicles branch as well as restaurants and bars being among them.)

In all such instances, retailers are fighting as best they can to overcome competitive threats. Even more extreme, though, are the approaches of such disrupters as Lidl and Aldi, in particular, whose strategies revolve around limiting selections (reducing the need for backroom space) and cutting costs – internally and to consumers – to the bone.

The latter’s strategy is disrupting the food retailing industry more dramatically than anything before it came close to doing. The club stores – Costo, Sam’s Club – caused a lot of shoppers to rethink shopping patterns a couple decades ago, but the careful among them quickly realized that the key to successfully shopping those stores – to save money – is to ‘pre-shop’ prices of things you want at other outlets. The clubs aren’t giving anything away, so some of their prices are far from the best out there.

And that concept was further complicated as Amazon introduced an ever-broader range of products online. Now, the click-and-collect concept that Walmart, among others, are greatly promoting are presenting further challenges to walk-in-and-buy oriented retailers.

It’s only a matter of time before Walmart and others figure out how to profitably do click-and-collect on food items. Fresh and frozen food items, that is: Offering click-and-collect on dry groceries is as simple as doing it.

Meanwhile, dollar stores also are becoming more competitive against grocers. Dollar Tree, for example, has been featuring – via a big store-front banner – a several-ounce ‘pre-conditioned’ steak for around $4.00. But this is a real ‘buyer beware’ item: The product looks good, but the ‘pre-conditioning’ has involved a form of pounding that’s beat the … flavor out of the product.

Still, to some shoppers, something called a ‘steak’ is still outside the range of what they usually consume for protein. And that’s the key issue on all the retail changes the industry is undergoing: The value is in the eyes of the beholders, and consumers, having an amazing assortment of tastes and concepts of what’s good, and good for them, will respond to grocers’ changes with their own ideas of what makes sense and what doesn’t.

Watch this space!

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“Bad” Fruits, Veggies, Turn “Good”

misfit fruits

Photo: Portland (ME) Press Herald

Maine-based Hannaford Supermarkets has begun offering less-than-perfect produce on sale in 15 of its home-state stores. Hannaford launched the same program in the Albany NY area last year, resulting, so far, in keeping some 100,000 pounds of edible food from being discarded.

Others jumping on the “misfit produce” bandwagon include Giant Eagle in the Pittsburgh area and Whole Foods in California. France’s Intermarche chain also has saved a lot of otherwise passed over produce and a lot of cash for customers, who enjoy discounted prices on oddly-shaped or slightly bruised items.

While a similar recycling program failed to gain traction in Raley’s supermarkets in California, the concept is providing to be a winner with consumers in a growing number of places – and why shouldn’t it, when shoppers are able to enjoy savings of as much as or more than 30% off regular retail prices.

 

A National Public Radio article on this trend noted last year that Americans waste enough perfectly nutritious but odd looking fruits and veggies annually to fill “44 skyscrapers” – a rather imprecise term, but you get the point.

Nationally, Restaurants Are Hurting; In Some Rural Areas, Not So Much

generic-restaurant-art

Are you eating out less than you did a while back? Are you, when you do eat out, going to smaller eateries? If so, you are in sync with a growing number of Americans, according to millions of restaurant tabs analyzed by American Express and the latest retail sales report on restaurant sales. Both those reports were reported by BusinessInsider.com (and here).

The thinking at both Amex and BI is that this shift reflects the reality that it’s getting cheaper to eat and home and more expensive to eat out.

Aside from shifts in ingredient costs, something else that’s pushing up the cost of eating out in some locations is one (or more) increases in meal tax. Example: We yesterday bought two chicken dinners to go at Kroger. One was $3.99, the other was $5.99. The Campbell County tax amounted to $1.18 – more than 10.25% of the cost of the food!

I’ve noticed, recently, on a couple of observational visits to a local Italian restaurant that, oddly, the place was staffed with double the number of servers the evening’s traffic justified. That’s probably part of the reason why that restaurant has maintained its prices while at least one other dropped its, in line with lower ingredient cost and lower staff costs, as fewer were being kept on or assigned shifts on evenings when traffic tends to be slow.

The slowdown in business in restaurants is definitely hitting large establishments hardest, to the extent that a number of them in high-priced New York City have closed. Rental costs have been rising rapidly there, and that is affecting the housing as well as the restaurant market: You’re liable to pay $25,000-$30,000 a month for a 5,000 sq. ft. (464.5 sq. m.) That doesn’t actually sound too bad, if your average meal ticket is $15, because at that price, figuring your rent at 25% of your overhead, you have to sell “only” 267 meals daily to hit your $120,000 monthly “nut” for rent and the other 75% of your overhead.

Around here (in a small town in central Virginia), you can rent 6000 sq ft. (557.4 sq m) for as little as (or even less than) $72,000 a year. That would put the monthly rental cost for your small restaurant at $6,000. As little as $200 a day walking in the door will cover that. But keep in mind, your total “nut” for the rent/lease plus the other 75% of your overhead will run to $24,000 a year. Break that down to your monthly/weekly/daily need, and you’ll still see a pretty reasonable number.

What kind of cuisine will you offer? What do you plan to call the place?

Oh, one more thing: The sit-down restaurants around here aren’t hurting as much those in some places, in part because there’s nothing to do around here, when you want to go out, except go to one of the local restaurants!

 

Food prices down? Fine, for now; But they’re market-driven, and winter’s coming

meal kits-1

Supermarkets across the U.S. continue reacting to deflationary market pressures by lowering prices on both commodities and packaged goods. Sometimes one chain or another – think of Walmart – doesn’t do reductions and price fluctuations as smoothly as they could, though.

Walmart, like a lot of major food retailers – it is, after all, America’s largest supermarket company – has been promoting store-wide ‘permanent’ roll-backs in prices for most or all of 2016. What they haven’t been talking about, with good reason, is the fact that the kinds and levels of price changes they institute will hardly negatively affect the company’s bottom line.

Example: Way earlier this year, a 20-oz. (567 g) loaf of their Great Value white bread could be had for $.88. Then, a couple of months later, the price was quietly upped to $.99. It’s since been upped again, to a bit more than one dollar.

(At one point in the late spring, the company seemed to have actually killed that bread brand, as shelves were devoid of it for a couple of weeks or more where I shop, in Central Virginia. But that could have been just another far-too-typical out-of-stock situation – a problem Walmart seemed to be struggling with a lot until recently, when they’ve actually brought back a few brands first appearing to be out-of-stock then totally disappearing.)

Example II: Generic large egg prices fell to an amazing $.88 a dozen in the early summer – in part due to an oversupply situation in the industry. That price held, at ‘my’ Walmart, for close to a month. Then, in an amazingly stupid more, the price was pushed up to $.99 behind promotional signs touting a ‘new low price’! Yep, they still were cheaper than the dollar-plus per dozen price at Food Lion, the only other chain retailer readily available to me. But how dumb do you think your customers are when you tout a higher price as a new ‘low’ one?

(Meanwhile, as consumer demand for ‘cage free’ eggs and chicken has grown, prices at that end of the hen fruit market have moved, and stayed, higher. But As this blog reported on Oct. 21, ‘Cage Free is Far From Trouble Free’, and this is an issue the chicken and egg industry is going to have to deal with.)

Rochester NY-based Wegmans announced a few days ago that it is cutting a bunch of prices across the store, with produce being among the most-positively-affected sections. Other supermarketers across the country have done the same or similar in recent months.

But consumers need to keep one thing in mind: In the 1980’s, a supermarket company named Grand Union – a venerable company with a colorful past – it was probably the first, and one of the few, supermarket operators to employ customer helpers who traversed a then-considered-huge 100,000 sq ft store in central New York state on roller skates – made a series of serious mistakes. One of them, the first or second in a sad series, was to declare that a round of price reductions it was introducing were ‘forever’. If you’re a believer, you may argue that God knows ‘forever’; whether you’re a believer or not, the smallest bit of common sense dictates that no supermarket company can afford to make promises like that.

Long story shortened: A year or so after one of its executives suffered what clearly appeared to be a ‘mob hit’ – his body was never found – this New Jersey-based company went bankrupt.

The ‘forever’ issue was only a symptom, as it turned out: The real cause of the company’s come-down/put-down was a succession of management companies’ desire to fatten their purses at the expense of the golden swan – the layer of the golden eggs.

As a shopper, you can count one thing, and only one thing, where supermarket prices are concerned: They are, and will continue to be, market-driven, both up and down.

While some of your best buys will always be found in your favorite store’s weekly flyer, the very best ones will always be found in your meat department, where items too close to a sell-buy date are marked down – sometimes way down.

But a word of caution: If you seek out that kind of savings, pay close attention to the ‘use or freeze by’ dates. While they are generally generous, in terms of absolute safety, don’t push your luck: Use, or freeze. (Or cook and freeze; The benefit is the roughly the same.)