Limited Assortment, Unlimited Potential

Discussion
Feb 28, 2003
George Anderson

By George Anderson


A growing number of consumers are discovering that whatever they give up in product selection is worth what they save on price in limited assortment grocery outlets.


Chains such as Save-A-Lot and Aldi are using a simple formula to grow sales. Offer a limited selection of private label foods in high demand categories at prices up to 40 percent below supermarket and other retail competitors.


Limited assortment grocery stores (much like dollar stores) are finding that their niche continues to expand as consumers from more demographic groups discover the value of shopping the channel.


Jon Hauptman, vice president, Willard Bishop Consulting Inc., told Florida Today, “The demographics for limited-assortment stores are expanding. It’s becoming an acceptable alternative for people who are making more money than you would think.”


The growth of limited assortment stores has come largely at the expense of supermarkets. According to the Florida Today report Save-A-Lot is “one of the industry’s fastest-growing chains, doubling the number of its stores to about 1,000 across 36 states. It ranks as the 13th-largest U.S. retail-grocery chain. The company reported $4 billion in sales last year.”


Moderator’s Comment: Two Questions–



  1. How big a threat are limited assortment grocery
    stores to supermarkets?

  2. Does the growth of limited assortment grocery pose
    a threat to national brands?


Private label quality is matching and, in some cases exceeding,
branded products. Getting consumer trial is the key for limited assortment stores.


It is also important to remember that limited assortment
grocery is not just limited to the value priced end of the retail market. Trader
Joe’s proves that daily with its private label gourmet and organic foods. [George
Anderson – Moderator
]

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