Discount Supermarkets Grow in Popularity

With the economy still struggling, grocery stores offering low-cost merchandise are thriving.

May 04, 2011

ST. LOUIS - Discount grocers have moved upscale, becoming popular among shoppers from the low to the high end of the income bracket, the St. Louis Post-Dispatch reports. Once frequented by more frugally minded consumers, discount supermarkets have moved into the mainstream.

"They are getting more consumers to go to them than ever before," said Phil Lempert, who analyzes the food industry for SupermarketGuru.com. "With the economy faltering and with food prices going up, [discount grocers] are certainly in a good place."

Some experts predict that discount grocery stores will lose some of their higher-end clientele after the economy trends upward again, but most agree that consumers will stick around. These supermarkets "won't retain all of their customers who have traded down during the recession, but we think there will be a certain amount of stickiness," said Craig Johnson, president of Customer Growth Partners.

Packaged goods have topped the list of the most popular items purchased at these retailers. "Once people go there and try it, they realize it's a perfectly good quality," said Johnson. "I??ve served [Aldi's] potato chips to people who didn't know they weren't Cape Cod kettle chips."

Save-A-Lot and Aldi ?" Midwestern discount chains ?" both have expansive plans to enlarge the number of their stores. "We??re growing like crazy," said Bill Shanner, CEO of Save-A-Lot. "In today's economy and today's environment, people are looking at value more so than ever before."

What??s being squeezed out are the traditional grocery stores, which now garner less than 50 percent of the grocery share, said Jim Hertel, managing partner with Willard Bishop. "It seems like the saddle is dropping out of the middle and going to either end. ?? These days, people are generally looking for a very low price or ... something unique," he said.

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