A guest column from PlanetRetail.net:
Against a wider backdrop of Wal-Mart reinforcing its by now unassailable hegemony, Kmart thrashing through what will either be its death throes or rebirth and a succession of profit warnings from the mainstream grocery retailers, it is notable that the brightest news in American grocery and general merchandise retailing has come from pioneering retailers that are offering distinctive formats and shopping experiences.
Two of the fastest growing retailers in the USA at the moment are Dollar General Stores and Whole Foods Markets, which have seen net sales grow by 63% and 81% respectively between 1999 and 2001. While Whole Foods has benefited from several acquisitions, Dollar General’s growth has been entirely organic and it now claims (having opened its 6,000th store in September) to be the largest operator of company-owned stores in the USA. Whole Foods, by contrast, claims to be the largest retailer of natural and organic foods in the world.
The burgeoning advance of dollar stores in the USA is a real phenomenon, with their popularity spanning a wide range of socio-economic bands and an estimated 55% of the US population now regularly shopping at these outlets. While Dollar General is the largest and fastest-growing of the dollar store chains, other such as Family Dollar, Deal$, Fred's Super Dollar Stores and Dollar Tree are all gaining in market share in key areas such as household cleaning, health & beauty and apparel. What is perhaps more interesting is that most of these businesses are steadily encroaching into ambient groceries, offering a mix of well-known brands and own label lines that are taking market share away from mainstream supermarkets and superstores. It is worth noting that Wal-Mart itself has begun introducing dollar store areas within its own outlets – testament indeed to the appeal of fixed price-point retailing.
At the other end of the spectrum is Whole Foods, a quality-led retailer that continues to garner plaudits for its distinctive store design and merchandising and leads the way in terms of the breadth and depth of its natural foods offer. It is tapping a growing market in face of mounting competition from the likes of Kroger (rolling out its Nature's Markets departments) and is maintaining a decent tempo of store openings across the USA. It has so far opened a single store in Canada but has not yet revealed plans for further international expansion. The main question that Whole Foods’ success raises is why isn’t someone doing the same thing in Europe?
Against a wider backdrop of Wal-Mart reinforcing its by now unassailable hegemony, Kmart thrashing through what will either be its death throes or rebirth and a succession of profit warnings from the mainstream grocery retailers, it is notable that the brightest news in American grocery and general merchandise retailing has come from pioneering retailers that are offering distinctive formats and shopping experiences.
Two of the fastest growing retailers in the USA at the moment are Dollar General Stores and Whole Foods Markets, which have seen net sales grow by 63% and 81% respectively between 1999 and 2001. While Whole Foods has benefited from several acquisitions, Dollar General’s growth has been entirely organic and it now claims (having opened its 6,000th store in September) to be the largest operator of company-owned stores in the USA. Whole Foods, by contrast, claims to be the largest retailer of natural and organic foods in the world.
The burgeoning advance of dollar stores in the USA is a real phenomenon, with their popularity spanning a wide range of socio-economic bands and an estimated 55% of the US population now regularly shopping at these outlets. While Dollar General is the largest and fastest-growing of the dollar store chains, other such as Family Dollar, Deal$, Fred's Super Dollar Stores and Dollar Tree are all gaining in market share in key areas such as household cleaning, health & beauty and apparel. What is perhaps more interesting is that most of these businesses are steadily encroaching into ambient groceries, offering a mix of well-known brands and own label lines that are taking market share away from mainstream supermarkets and superstores. It is worth noting that Wal-Mart itself has begun introducing dollar store areas within its own outlets – testament indeed to the appeal of fixed price-point retailing.
At the other end of the spectrum is Whole Foods, a quality-led retailer that continues to garner plaudits for its distinctive store design and merchandising and leads the way in terms of the breadth and depth of its natural foods offer. It is tapping a growing market in face of mounting competition from the likes of Kroger (rolling out its Nature's Markets departments) and is maintaining a decent tempo of store openings across the USA. It has so far opened a single store in Canada but has not yet revealed plans for further international expansion. The main question that Whole Foods’ success raises is why isn’t someone doing the same thing in Europe?
- KC's View:
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It always is interesting to see how people outside the US see the retailing scene here…and the central lesson of PlanetRetail’s analysis, it seems to us, is that both Dollar general and Whole Foods are finding different ways to approach the market…not just competing on price.
Finding the differential advantage is always the better approach…especially because the battle almost always is against Wal-Mart.
The other lesson is that you have to love people who use phrases like “unassailable hegemony” in business analysis.
