Photo: easyFoodstore
Does the world need a lower-than-low-price grocer?
In recent years, grocers — from mainstream chains like Kroger to extreme discounters such as Aldi — have picked up on fresh and organic food trends. One new grocer in the U.K., however, isn’t concerning itself with making room for fresh vegetables or anything of the sort. The store, called easyFoodstore, makes no apologies about being a budget grocer, with ultra-low prices and the questionably healthy product assortment that entails.
CBS News reported that easyFoodstore is the brainchild of billionaire Stelios Haji-Ionnanou, who founded the EasyJet budget airline. Mr. Haji-Ionnanou recently opened the store in northwest London with the tagline, “No expensive brands. Just food honestly priced.” Mr. Haji-Ionannou described the store as being targeted at the “unwaged and low-waged” shopper and intends to serve a space below the niche that chains, including Aldi and Lidl, have carved out.
As part of the store’s opening promotion, easyFoodstore announced that for the month of February it would be offering products such as canned sardines, soups and pasta for 25p (the U.K. equivalent of 36 cents). The Telegraph reported that the prices will likely rise to around 50p at the end of February. The store, according to the report, stocks 76 items.
The concept — or at least the low price promotion — appears to be quite popular already. The Telegraph reported that on February 3, shortly after the store’s grand opening, the store was forced to close entirely to restock. Budget shoppers had cleared off the shelves entirely.
A Telegraph video report described the easyFoodstore shopping experience as “chaotic but cheap.” Shoppers in the picked-over store praised the deals in the context of their own difficult economic situations.
But not everyone is thrilled about Mr. Haji-Ionannou’s focus on ultra-low price.
An opinion piece in The Guardian posited that the low food quality has significant social costs, such as negatively affecting both public health and the climate.
The Guardian article states that the store layout “elevates utilitarianism and cheerlessness to an art form,” and describes it as having a sense of “resigned miserableness.”
Discussion Questions
Could a store like easyFoodstore fill a gap opened by Aldi and other low-price grocers that are moving upscale? Can conventional grocers meet the needs of the “unwaged and low-waged” shoppers Haji-Ionannou is targeting with easyFoodstore?
Poll
BrainTrust
Zel Bianco
President, founder and CEO Interactive Edge
Warren Thayer
Editor Emeritus & Co-Founder, Frozen & Refrigerated Buyer
Well, this is certainly a cheerless article for a Friday. I can see that easyFoodstore will have initial success but I believe that the social cost will eventually catch up with the store. I expect dollar stores to continue to meet the needs of low-waged shoppers who are looking for good deals on basics and I see a lot of potential for more upscale grocers to offer healthy, affordable food — such as Whole Foods’ 365 concept.
In the U.S. besides Aldi, Save-a-Lot and the impending arriving of Lidl, the dollar stores in effect offer pricing similar to that of easyFoodstore. Therefore, I am not convinced that such a gap exists in the market.
Unless conventional grocers can demonstrate a real and sustainable competitive price advantage, this is a formula for disaster. Even if conventional retailers could get down to these price levels, I would question its impact on its desired positioning in the market.
It would be a foolish decision for a conventional store to move so far outside of its brand. Ironically, since the goal would be to obtain poor folks as customers, that would be driven by greed. We can’t admit that not every customer is OUR customer. I just reviewed a start-up business plan for a friend who claimed there are 1 billion customers just waiting for his product. That is just plain dumb.
The fundamental principle here is this: Pick a lane, and do everything you can to own that lane! Let someone else have the other lanes — just make yours a success.
I also don’t agree with the implication that a food store has to pick cheap OR healthy. As we’ve seen with “misshapen” fruits and vegetables (i.e., product shaped by nature itself) you can provide both economic and healthy product to the good people who are struggling financially.
Finally a comment on the “decor” of the store shown above. There is no need to make the place look like an industrial storage warehouse. A little more effort and investment in making the shelves and displays look nice shows you have respect and appreciation for your customers. Make “discount” a dignified experience.
Not without every nutritionist and GMA/FMI lobbyist in D.C. trying to get them shut down.
Very few people reading this article and those to come will understand the plight of the under-served. These folks may not be eating kale — but at least they won’t be eating Kibbles either.
It’s not the aftermath of World War II. I don’t think anyone who has any means wants to shop where utilitarianism and cheerlessness is an art form. When talking to a Pepsico vice president once she told me she used to work with low-income residents and found a Louis Vuitton bag in a living room. She told me, “we have no idea about the poor — they are just like us.” Who aspires to shop worse?
Cheap has a price — especially when it comes to food.
There’s a sufficient gap here in the U.S. Even with “the recession over,” the underclass is growing steadily. I’ve worked in poverty programs all my life, both in NYC and now here in Vermont, and the need is as great, or greater than ever. New people are being added on my Meals on Wheels route every week, and I know for fact that’s also true elsewhere. So there’s a need, and a growing one.
If people are worried about unhealthy food, and they should be, what’s required is social and economic change. If we can buy enough congressmen, maybe that’ll happen someday, but I’m not holding my breath. Having said all that, it would be foolish indeed for Kroger or the more upscale supermarkets to go after this particular low-income niche. I still believe in the importance of branding and differentiation. Mixed signals are not wise. Let a bottom-feeder take care of serving this niche, and work for change to help eradicate the widespread and severe societal damage of poverty. (And boy, am I going to hear about this from some of you!)
I have no idea about the demand for this concept in the U.K. In the U.S. we have a fairly generous food stamp program which prevents the “unwaged and low-waged” shoppers from having to settle for something less that Walmart and Aldi. Even with Aldi moving more upscale they have not abandoned their concept of selling good quality food for as low as price as possible. For those willing to settle for less, we have a large network of dollar stores to fill that need.
If you have one store and are selling groceries cheaper than Aldi, you do not have a business. You have a charity.
Warren Thayer:
“(And boy, am I going to hear about this from some of you!)”
Yeah, you sure are! To say, “thanks for all you do for those less fortunate than us here on the ‘Wire. For as long as we have known each other I have enjoyed you and your perspective on our industry. Now you are going to go and make me respect you too?
“Why, Wyatt, it’s almost too much to bear!” —Val Kilmer as Doc Holliday in “Tombstone.”
😉
If this actually succeeds, then it’s a depressing commentary on the wide economic divide among the haves and the have-nots. Paint the walls gray and remove the orange signage and you get a post-Armageddon shopping experience.
Offering super-low prices doesn’t have to go together with a dismal shopping experience, unhealthy or low-quality foods.
Just a note about the Louis Vuitton handbag … Not saying this is always true, but when I worked homeless shelters in Brooklyn, people would occasionally come in with very upscale items that had been given away by local charities. Wealthy people would give away almost-new and expensive stuff to one charity or another because they were tired of it. In one of our winter clothing drives, we once found a full-length mink coat in our collection box. We sold it to use the money for the soup kitchen; letting someone have it would have resulted in a mugging for sure, within a day.
Anyway, my point is that appearances can be deceiving. The Vuitton bag? Might have been stolen. Might have been payment for a drug deal. Might have been a cheap counterfeit. Might have come from a charity. Might have been paid for at full price at Bloomingdale’s. You just don’t know.
It seems that the 99 cent stores are starting to fill the low-end food area.
This concept sounds like Stew Leonard’s on steroids. Let’s see: low prices, check; chaotic shopping experience, check and limited assortment, check. Aldi and Save-A-Lot are as close as the American market gets to a hard discounter. Someone can always go lower by reducing cost. Consider lower rent or limited service. Rotate the offering based on what is on deal. Yes this will work.
I’m more than a little dubious about the odds of taking on Aldi … and winning (that must have been a fun conversation at the bank if he sought financing: who are going to be your customers Mr H.? The unwaged? … oh….).
But it sounds not unlike our dollar stores. Offer an odd selection of ultra low priced whatever and make it work — or try to, at least — with ultra-low overhead.
As for the implications of the headlines that cutting corners, as in health and safety corners, will be an inevitable result, we’ll just have to wait and see.
What’s there to debate? Is cheap food typically less healthy? Yes. Is cheap food sometimes necessary? Yes.
I would like to see this format expanded to help conserve budget shopper’s other key resource: time. When money is tight time is often even tighter — multiple jobs, multiple commutes, childcare, etc. — this format would do well to include prepared and easy to prepare foods as well.
I’m surprised many commenters here are so seemingly upset or negative about this concept. It will either work or it won’t. Customers will either shop there and cause the chain to grow and entice other grocers to try to enter that niche as well, or very few will shop there and it will fail.
Food is one of the few expenditures that people really do have many choices in deciding where to shop and how much they are willing to pay for certain items depending not just on their income but also on their priorities. Surely no one is suggesting that easyFoodstore will sell dangerous or unsanitary or spoiled food. Can the canned green beans we purchase at Kroger or Jewel or Aldi really be that much better than what easyFoodstore sells? I doubt it.
In my opinion, if the concept succeeds in England, something similar will very definitely show up here.
Will there will be a vacuum to be filled on the low end of the market as Aldi and extreme discounters move upstream in the grocery market? Not sure I agree that Aldi, Save-A-Lot, et al are really moving upstream — subject for a future post. However, if this happens there may be room for the ultra low-priced store. Will this be a highly desirable niche? No, but as long as it delivers value, there’s a place for them.
There’s a place for aspirational shopping that inspires foodies to try adventurous new cuisine. There’s a place for the middle-of-the-road grocer who supplies families’ week-to-week needs. And there’s a place for a price-only retailer (like Aldi) that undercuts everyone on price but delivers no atmosphere at all.
Not everyone can afford ambiance.
There is never a price bottom in any market, only a product bottom. As long as a food product is passably edible, financially challenged consumers will buy it.