Food’s Misfits Find a Home at Salvage Grocers
By Tom Ryan
Much like the
Island of Misfit Toys in Rudolph the Red Nosed Reindeer,
the food industry also has its place for misfits. With several hundred
across the country, salvage stores have become the end destination for
many of the dented tomato cans, crushed cereal boxes, and bottles of salad
dressing past their “best before” dates.
The stock at
salvage stores are usually items returned by traditional supermarkets to
their warehouses. Many have been either dropped or somehow punctured in
transit. Some are past their sell-by dates although the dates indicate
when something tastes best rather than when it’s safe to eat. In some cases,
manufacturers overestimated demand (such
as with a cereal box promotion tied to a movie launch).
Consumers are
promised savings of between 30 percent and 70 percent. According to an
article in the Denver Post, consumers
who frequent salvage stores do the bulk of their food shopping at traditional
grocers, which offer greater selections, especially in dairy and produce.
But one appeal of a salvage grocer trip is that it offers a “treasure hunt” because
many items are there for a limited time.
Although often
not optimal, the food is edible. Just like traditional grocers, inspectors
check that facilities and products are clean and that cans are not severely
damaged, Patti Klocker, assistant director for the Consumer Protection
Division of the Colorado Department of Public Health and Environment, told The Associated
Press.
Besides limited
assortments, the downside of salvage stores for consumers is that many
are open only a few days a week (typically Friday and Saturday), many are
located in remote areas, and many feature a bare-bone, warehouse-like look.
According to The Associated
Press, prices at salvage stores have also been
creeping up over the last year due to greater demand for close-out product.
In fact, some staples, such as cereal and salad dressing at a Friday Store
in Denver, were less expensive at a nearby Wal-Mart.
But the savings
on many items are apparently sizable enough that consumers in this economy
are going to salvage stores to buy in bulk.
“In this economy,
we need to learn to save the food we buy,” Malena Perdomo, a Denver registered
dietitian, told The Denver Post. “If
people are really short with money and go to these places, I’d suggest
that as soon as they get home, they portion out the big quantities into
plastic bags, and freeze everything but a week’s supply.”
Discussion
Question: Are salvage grocers a viable way for grocers to liquidate out-of-date,
damaged or otherwise tainted-yet-edible food? Are salvage grocers an
aid or a possible threat to traditional grocers? Is there a growth opportunity
in salvage grocers?
Depends on the salvage grocer which is another way of saying, “No.” Some salvage operators are perfectly ethical folks who know how to move merchandise safely and quickly. Others don’t care what they are selling as long as it sells. Hard to generalize about a channel, but I’ve seen some salvage operations that would make your skin crawl. So…as always…it pays to know who you are doing business with–and how they conduct their business in so far as it impacts your brand’s reputation. The consumer is likely to hold the manufacturer responsible for product failure.
Salvage grocers have never been a threat to traditional grocers. They are a good place for out-of-date groceries to go before they end up at the food pantries. Most of the ones I’ve seen are low-volume units. They really don’t have any meaningful marketshare. Sometimes the groceries are not all that cheap as the article states that some items are less expensive than Wal-Mart.
These are two different demographics with different marketing niches. The salvage grocer shopper is looking for a deal, knowing that everything on their list will not be found at this location. The one to be concerned about is the Aldi concept. No frills but good deals and quality product.
Depends where they are but, in general, I’d say they are more of a threat to grocers these days since they can save consumers 75% on some items they carry. These outlets are doing very well. But if I was a grocer I wouldn’t get involved with them.
Here’s the problem: You sell them your out of date or damaged stock. Maybe it’s bad quality or someone gets sick. Do you want that coming back to you? You’re better off donating some safe products to a food bank or a local meals program. take the publicity and a tax write-off.
Whether or not the food is viable depends upon the companies involved. The idea that consumers are shopping for food to save ignores the reality of many people shopping at these stores. Many people regularly shopping at these stores are buying what they can on this week’s paycheck for food this week. These are not the “treasure hunters” but the consumers who can’t afford to pay a higher price.
I’d been reading about them and wished I could check out a “salvage” grocery store for myself since I knew of none near us. Not long ago on a drive to a cottage in a ruralish area I saw one and insisted we stop to reconnoiter.
The store we visited was spartan but clean. Selection was very limited but much that I saw was national brand merchandise. There were definitely some crushed items for sale (but then, things often get crushed in the trunk of our cars.) A lot of the other merchandise seemed to be tied to outdated events: 1. holiday–(Christmas shape crackers, candy in Easter packaging), 2. cause–(coffee in pink breast cancer month containers, soup with BC outer labels), 3.movie marketing — (pop with a Dark Knight promo, etc,). The prices looked quite good to me, but relative prices for the “locals” were hard to judge since most things out of the big city (including gas!) cost less to begin with. We picked up some soup and a few snacks (well within freshness code) and I would have stocked up on some other items had not our car already been packed to the gills and my family chomping at the bit to get to the lake. One of the kids remarked that the merchandise was more like you’d find hidden in the back of your cupboard than salvage junk.
I think there is a reason both retailers and manufacturers want to keep this type of store out in the hinterlands and away from direct competition with mainstream grocers.
There is plenty of opportunity for this segment of grocer. Anyone hear of that California “Mom & Pop” called, Grocery Outlet? They’re “only” $700M+ in size. Sure there are inherent risks with the product. However, as someone stated above, the food could be donated to charity, but then someone gets sick at the charity and they sue, too. That happened in Chicago.
Bottom line, now more than ever, people of ALL income levels are looking for deals. Trust me. A six-figure-income doctor got caught shoplifting in a supermarket. I think the format is just perfect! Eating a little out-of-code product will toughen us all up a little, hopefully. 😉