Would you buy fresh foods at a dollar store? You might react to this question as "no way... I'd never step foot into a dollar store. Dollar stores can't sell food... dollar stores are great cheap stuff... party items... household cleaning items... blah blah blah".
Well, guess what? People are buying fresh foods at Dollar General Markets, the grocery concept launched by Dollar General stores last year. According to an article in supermarket news, Dollar General Markets generate average sales of $4 million to $5 million per unit, vs. $1.4 million at the traditional Dollar General Stores. Still think the consumer won't buy foods from a dollar store?
Dollar General in a press release announced plans to open approximately 40 Dollar General Market stores for fiscal 2012. That is small potatoes in the $500 Billion retail food sector but it is a telling sign of what is to come in the small footprint retail food sector.
Dollar General plans to open 4 small format Dollar General Markets in California in 2012.
Dollar General competing with Walmart Express
Walmart is rolling out their Walmart Express small footprint stores that are primarily grocery oriented and are just the right size to fit everywhere at around 3,000 sq ft. Walmart Express is also focusing on the under-served food deserts... mostly urban locations that do not have retail grocery stores that sell fresh foods, produce and other healthy foods. Walmart Express - A Peek at Express Stores in Chicago illustrates through a video the impact of small footprint retail grocery on a neighborhood that was a food desert before Walmart entered the area.
Dollar General Market Stays clear of the Mushy Middle
I asked my colleague, Steve Johnson, the Grocerant Guru for his take on Dollar General Market. "The mush middle of grocery retail will be challenged. Whole Foods is catering to the 1 percent segment and are doing just fine. The 1 percent segment has the income to buy high margin fresh prepared foods and components. Dollar Stores are growing and the middle guys like Safeway, Kroger and Target are losing".
Impact on the Food & Beverage retail sector
Food is everywhere and the industry term is called "channel blurring". Where is food in the small footprint retail sector?
Fresh and Easy Markets on the west coast owned by British retail giant Tesco
Walmart Express - 10,000 sq. ft mini Walmarts that can be shoe horned into most every community
Bed Bath & Beyond's beta test of World Market sections in their stores, approximately 2,000 sq. ft of upscale shelf stable, refrigerated and frozen foods.
Walgreens food oasis stores selling fresh fruits, vegetables, whole grains, lean protein and other healthy meal components to help address the need for greater access to affordable, nutritious food.
The consumer will be expecting fresh foods everywhere, all of the time, whenever they want.