Giant Eagle Eyes a Better Limited-Grocer Mousetrap

Nov 08, 2012

Limited-assortment grocers appear to be generally competing favorably against traditional supermarkets. But Giant Eagle believes its new concept — Good Cents Grocery + More — also competes well against similar limited-assortment stores.

Heralding it as the "missing link between discount stores and supermarkets," Good Cents Grocery is an evolution of the Valu King prototype Giant Eagle has been testing in the Pittsburgh area over the last several years.

Among the differences relative to other similar limited-assortment grocers such as Aldi, Bottom Dollar Food and Save-A-Lot that have moved into the Western Pennsylvania in recent years, the 46,000-square-foot store features a full-service deli and a meat department that cuts and grinds meats in the store. An expansive cheese department features more than 60 varieties and lies next to a small olive bar.

The produce section has tripled in size since the first Valu King opened in 2008. The store also features a health & beauty section as well as pet food, and soymilk that weren’t carried in earlier versions of Valu King. The overall alterations over the years come from customer requests.

"While today’s shoppers are certainly looking to stretch their food budgets through affordable-priced shopping, they shouldn’t have to sacrifice quality and freshness," said John Tedesco, SVP of merchandising, in a statement.

Promising "extremely low prices on produce, deli, meat, cheese and grocery items," the store still carries the low-price Valu Time brands that largely defined the discount provided in the original format. But more mid-price to premium brands have been added to the mix since earlier versions of Valu King. The Pittsburgh Post-Gazette noted that the juice section carries Tropicana, Florida’s Natural, Dole and Minute Maid as well as a Valu Time version.

To save both labor costs and for space constraints, the store doesn’t have a bakery or a pharmacy. Customers are checked out, but have to either bring their own bags or pay five cents per bag. They also need to pack up their own groceries.

The store’s value proposition will be continually tested since it sits directly next to a Bottom Dollar. According to the Pittsburgh Tribune, iceberg lettuce is priced at 79 cents, exactly the same as Bottom Dollar. But prices at Good Cents Grocery faired notably better for bananas, Maxwell House Wake-Up Roast Coffee and Progresso soup.

The six existing Valu King stores are expected to be renamed to Good Cents Grocery + More after they are converted to the new format.

How should limited-assortment grocers differentiate themselves from their more direct competitors as well as against traditional grocers? What do you think of Good Cents Grocery + More’s increased emphasis on produce, deli offerings, HBC and national brands?

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8 Comments on "Giant Eagle Eyes a Better Limited-Grocer Mousetrap"

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Gene Hoffman
Gene Hoffman
4 years 11 months ago

The beauty of tailoring is in the fitting. No one opts for an ill-fitting suit — or store. So once you know who your real and potential customers are, tailor your stores to their desires. Rocket science? Nope!

Tony Orlando

It is not a bad concept, but as I have said a million times before, the bottom lines will be very very thin, as commodities continue to climb higher, and Obamacare is next to crush us. Tons of stores with less money in customers pockets does not create a winning formula, unless you can boost the bottom line on some fringe items, perimeter-wise. Except for some big income pocket areas, most towns will battle it out for cash starved consumers, and the winner will always be the customer!!!

Ed Rosenbaum

Target marketing and location are the key elements to success. The next question is, how are they determining success? Tony has the best view of this in my opinion. He is the one actually in the battle fighting the fight.

I do not see how a newcomer in the market will be able to get enough of the remaining pie to make it beneficial to put out the initial investment.

David Livingston
4 years 11 months ago

Good Cents Grocery doesn’t sound like a limited assortment store. If it has an emphasis on produce, a deli, HBC, meat cutters, 46,000 square feet and national brands, that sound more like a regular supermarket. Seems to me that if you want to be a good limited assortment store, you first need not be a conventional supermarket.

It sounds like Giant Eagle tried the limited assortment format with Valu King and it failed. So far I’ve only seen Trader Joe’s and Aldi make it work. No one else has. And don’t ask about Save-A-Lot; we are seeing that format quickly fading.

Herb Sorensen
Sounds a lot like Tesco’s Fresh & Easy, Walmart’s Marketside and Trader Joe’. But then, Stew Leonard’s manages to generate $100 million annual sales with just 2000 items. One principal driver of Costco’s high sales is the dominant, intuitive, distinctive path. Trader Joe’s manages the same effect by having a much smaller store, without the coerced dominant path. The path issue is HUGE, but everyone tends to focus on the second huge impact — selection. But the reality is that the typical household only buys 300-400 distinct items in an entire year, half of those regularly. This means that Stew Leonard’s can essentially, with 2000 items, offer the shopper 5 choices for everything they are likely to want to buy, instead of the 200 choices per item in the typical supermarket. (But then, suppliers PAY supermarkets to suppress sales with those 200 choices!!!) The much larger choice is attractive, that is, it attracts shoppers to the store, but it is a disaster as far as selling is concerned. Hence, the heart of super selling in any store is “How to Sell the Few, in the Presence of the Many.” Unfortunately, standard self-service retailing turns this on its head by trying… Read more »
Craig Sundstrom

I recently had an opportunity to visit an Aldi — yes, when I went in I said David had referred me — and what struck me the most (aside from the small size and warehouse-like displays) was how the house brands tried to mimic national brands (right down to the color, shape and font-styles). So it’s safe to say their MO is to NOT differentiate (except of course on price)…or more precisely, to help customers carry on the illusion they actually shopped somewhere else. As for this example, there is long history in food selling of discounters progressively “upgrading” their image until they really aren’t a discounter anymore…it sounds like GCG is well along on that path.

Kai Clarke

This is a great concept. Price and limited selection of key items, combined with incredible customer service will make this concept a continued success. Continuing to do what they have been doing, and working on great customer service will make this model one which the industry will continue to follow (and imitate).

W. Frank Dell II

The limited assortment store continues to evolve here in the USA. In Europe the hard discounter has been a powerful format for years. A 46,000 square foot store is large when compared with the competition, which provides room for more items and categories. Another competitor has recently open stores in Florida based on the Russian model.

As long as the economy continues to stagnate, hard discount with limited selection will thrive. A slightly wider selection in categories without the depth, easy shop and good perishables is a solid formula for these times.


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