Thursday, August 25, 2016

Dinner For One -- August 25, 2016

Updates

August 27, 2016: Target offers 10% discount on everything in the store; everything at the website.
Target is launching a first-of-its-kind one-day sale to try and boost back-to-school shopper traffic amid a boycott over its bathroom policy.
The retailer is offering a 10% discount on everything in its stores and online on Sunday. Target is calling the event #TargetRunDay.
It marks the first time Target has ever offered a 10% discount both in stores and on its website.
The sale comes after Target last week reported its first quarterly traffic decline in more than two years.
Target's same-store transactions, which is how traffic is measured, fell 2.2% in the second quarter. Overall, sales fell 7.2% to $16.2 billion.
Won't amount to a hill of beans. Our local grocery store went out of business, offering 30% discount one everything, and the story was still "empty" of shoppers.


Original Post
This is quite a story. From Fortune:
The world’s largest retailer, Wal-Mart, hit its dollar store competitor, hard.
Dollar General has been cutting prices by about 10% on hundreds of staples like milk and eggs as it looks to keep customers who are drifting back to Walmart.
The dollar store was one of the fastest growing retailers in the years after the Great Recession as low-income shoppers looked for lower prices and closer stores to spend less on gas. On Thursday it reported comparable sales increased 0.7%, well below the 2.6% growth analysts were expecting. 
And from Bloomberg, Walmart strikes back at Dollar Stores:
Looks like Wal-Mart is finally coming after Dollar General -- and it seems to be working.
Shares of America's two largest dollar store chains tumbled Thursday after both reported quarterly sales that fell short of Wall Street estimates. One, Dollar Tree, also cut its sales forecast for the year. Both companies mentioned increased competition and deflation. Dollar General suffered from that sadly common retailer affliction, "unseasonably mild spring weather."
From an earlier post: Walmart sells more than Apple, Amazon, and Microsoft combined.

Data points from the Fortune story:
  • shares of Dollar General fell almost 20% today, in a market that was mostly flat, slightly negative
  • fewer shoppers visiting Dollar General, according to latest earning report
  • meanwhile, Walmart reported shopper traffic rose for the 8th straight quarter
  • Walmart resurgence due to aggressive pricing that boosted its grocery business
  • Walmart gets some 55% of its revenue from food
  • Target also hurt by Walmart's aggressive pricing (Target has other problems)
  • Dollar Tree shares also fell today; down about 10%
  • Walmart efforts to upgrade its fresh food area looks to be working
  • # of Americans on food stamps has been dropping
Data points from the Bloomberg story:
  • Walmart Express was a failure; it was in response to Dollar General, Dollar Tree
  • Walmart changed strategy; shutter Walmart Express; instead, cut prices even more
  • Walmart's cut in prices are over 12% less than DG, DT (in North Carolina, as an example)
  • also, German no-frills supermarket Aldi has been expanding at a faster clip
  • another German competitor, Lidl, poised to enter the US; the race to the bottom is unlikely to abate
  • aside from the most recent recession, grocery prices haven't fallen this much since the 1960s; it pays to cook at home
Comment: in our immediate area (I can bike to all), we have:
  • a Walmart (10 minutes by bike)
  • a Target (4 minutes by bike)
  • an Albertson's (Safeway, Tom Thumb) (4 minutes by bike)
  • a Minyard's (1 minute by bike)
  • Market Street (15 minutes by bike)
Minyard's opened one year ago across the street from where we live; it closed one week ago, unable to compete with the others.

Target is generally "empty." Very, very nice store, but very, very little traffic.

Albertson's has really upgraded in the past year and is probably the only one capable of competing with Walmart.

Market Street, upscale, but a bit pricey. The typical Walmart shopper won't go to Market Street, but most Market Street customers will visit Walmart periodically.

We live in a very upscale neighborhood north of Ft Worth, near DFW. Our older adult daughter (three school children of her own) with above-average income prefers Walmart for grocery shopping. Target is her least favorite.

I can bike to all grocery stores mentioned, although Albertson's is closest (now that Minyard's has closed) and the one I prefer, but I have no problem shopping at Walmart. I've never seen a Target close its door due to lack of business but this particular Target seems to lose grocery shoppers to Albertson's and/or Walmart and department shopping to Walmart.

 
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We'll have a Bakken story later to accompany these photos. Life is good.





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