Giant Eagle to try and follow Aldi's lead. (sale, organic)

[zip95]

So what's going on with the North Hills? The Ross shopping area looks like hell (slowly becoming one of the worst in the metro), A discount Grocer moving in. All of this with Wexford remaining the upper-middle-class Pittsburgh mecca. Is the demographic data is changing, perhaps Ross and Shaler incomes are falling???... Retailers make decisions on facts and data not word-on-the-street... Giant Eagle wouldn't do this in Ross if it didn't make sense?

[Hopes]

Originally Posted by zip95

So what's going on with the North Hills? The Ross shopping area looks like hell (slowly becoming one of the worst in the metro), A discount Grocer moving in. All of this with Wexford remaining the upper-middle-class Pittsburgh mecca. Is the demographic data is changing, perhaps Ross and Shaler incomes are falling???... Retailers make decisions on facts and data not word-on-the-street... Giant Eagle wouldn't do this in Ross if it didn't make sense?

Giant Eagle is doing this BECAUSE Bottom Dollar is opening a store on McKnight Road. Up until now, Bottom Dollar has opened stores in the low income areas, That's the Bottom Dollar MO. They move into a market first opening in the low income areas and then spread everywhere. Giant Eagle is well aware. Now that Bottom Dollar is going to be direct competition, Giant Eagle can't afford to not compete because most people like to save money regardless of their income.

It's funny you interpret this as an indication of Ross and Shaler declining. Aldi opened a bigger store in Hampton than the one it has in Shaler. I see all sorts of my neighbors shopping there. Yep, people who aren't hurting for money shop at Aldi.

[takomama]

I love Aldi. You have to shop smart, but there is plenty of healthy fresh food available at Aldi.

[zip95]

Originally Posted by Hopes

Giant Eagle is doing this BECAUSE Bottom Dollar is opening a store on McKnight Road. Up until now, Bottom Dollar has opened stores in the low income areas, That's the Bottom Dollar MO. They move into a market first opening in the low income areas and then spread everywhere. Giant Eagle is well aware. Now that Bottom Dollar is going to be direct competition, Giant Eagle can't afford to not compete because most people like to save money regardless of their income.

It's funny you interpret this as an indication of Ross and Shaler declining. Aldi opened a bigger store in Hampton than the one it has in Shaler. I see all sorts of my neighbors shopping there. Yep, people who aren't hurting for money shop at Aldi.

I'm not sure that makes sense to me?

You are saying that Bottom dollar (a low end discount store) opened a store in Ross. Which to my mind is more evidence that they felt Ross/Shaler are good locations for low end stores. Next, Giant Eagle (a mid level store) felt they were losing market share on the low end, so they opened yet another low end discount store. Now Giant Eagle will have 2 stores at twice the cost to regain a fraction of the same market share they used to have?


EDIT: Actually now that I think about it maybe you are right... I've seen strategies like this before. Well capitalized companies with cash to burn try to make their competitors unprofitable. In this case, Giant Eagle is losing some low end market share. By adding a new discount grocer, perhaps they are hoping to fragment the low-end market enough to make Bottom Dollar unprofitable? Hoping that after a few years Bottom Dollar decides to leave... and Giant Eagle protects their mid-level cash cow store?

[Hopes]

Originally Posted by zip95

You are saying that Bottom dollar (a low end discount store) opened a store in Ross. Which to my mind is more evidence that they felt Ross/Shaler are good locations for low end stores.

All areas are good areas for budget food stores. They merely start out in a region by opening in low income areas, next branching out into higher income areas. The store opening in Ross is an indication that Bottom Dollar is ready to position itself throughout the region, not just in low income areas. That's the way the company infultrates a region. Discount food stores are not an indication of an area going downhill.

Originally Posted by zip95

Next, Giant Eagle (a mid level store) felt they were losing market share on the low end, so they opened yet another low end discount store.

Bottom Dollar planned to open a store where Goodwill was located. Giant Eagle has retaliated by deciding to open Valu King next door where Roomful Express was located. There is already an Aldi at the Northway Mall, which is probably the reason Bottom Dollar chose Ross for it's newest location.

Originally Posted by zip95

Now Giant Eagle will have 2 stores at twice the cost to regain a fraction of the same market share they used to have?

I think you'll find that Giant Eagle will slowly become less dominant, less over priced. Other areas of the country have very competitive grocery stores and food prices are substantially cheaper, even in high cost of living areas. Pittsburgh's food prices have been crazy high, especially considering it's a low cost of living area, because Giant Eagle dominates the region.

Originally Posted by zip95

EDIT: Actually now that I think about it maybe you are right... I've seen strategies like this before. Well capitalized companies with cash to burn try to make their competitors unprofitable. In this case, Giant Eagle is losing some low end market share. By adding a new discount grocer, perhaps they are hoping to fragment the low-end market enough to make Bottom Dollar unprofitable? Hoping that after a few years Bottom Dollar decides to leave... and Giant Eagle protects their mid-level cash cow store?

Giant Eagle can't afford to NOT compete. Valu King isn't new to Giant Eagle. Giant Eagle never opened one here. That's all. Until now, Giant Eagle has dominated the region with over priced groceries. It's the regular grocery stores like Shop n Save that can't compete well with Giant Eagle. That's how it stayed dominant. But these budget grocery stores can afford to compete. Bottom Dollar isn't going anywhere. Aldi keeps growing. I anticipate that Bottom Dollar will do the same. Actually, I think Bottom Dollar will grow quicker than Aldi. It has a more aggressive strategy for infultrating a market. And Bottom Dollar is a better sore than Aldi because it has larger selection, brand names, etc.

[Mr. Mon]

Originally Posted by steindle

Moving back to Pittsburgh from Nashville, my wife and I were stunned by Giant Eagle's prices. I guess we were just accustomed to it when we last lived here (3 years ago), but basic staples were literally 1/2 to 3/4 the price at Tennessee Kroger's. Until we get back on our feet economically from the move, we literally can't afford to shop at Giant Eagle. (Aldi's has been a lifesaver in this sense.)

The price of groceries in Pittsburgh is astounding. I don't know what sort of special conditions we have here that causes food to be so expensive, but whatever it is I can often "smartly" shop for fresh food at Whole Foods for less than Giant Eagle. That is astounding. I save a lot by growing veggies, buying meat in bulk from farmers, and hitting Trader Joe's for other items.

[DurangoJoe]

Originally Posted by Mr. Mon

The price of groceries in Pittsburgh is astounding. I don't know what sort of special conditions we have here that causes food to be so expensive, but whatever it is I can often "smartly" shop for fresh food at Whole Foods for less than Giant Eagle. That is astounding. I save a lot by growing veggies, buying meat in bulk from farmers, and hitting Trader Joe's for other items.

Absolutely true. Regardless of the reputation they have as upper end, I've found better prices on many items at WF vs GE. I was very surprised and not only was WF less, they were significantly less.

I still do quite a bit of shopping at Costco though. That's where most of my grocery dollars go with WF or GE only used for smaller quantities of some items.

[gg]

If you are into quality and organics as well as no artificial crap for a good price, no one beats Trader Joe's. That is in a league by itself. I buy organic grass fed beef for a reasonable price as well as piles of organic veggies. Not to mention the amazing cheese selection for the price. It isn't for the yinzer crowd, but it is great if you want a good price for good product. Best produce around as well as bread that doesn't have a bunch of crap in it. Good luck though.

[Herodotus]

Giant Eagle used to have plenty of competition. It's main local competition used to be Thorofare. They disappeared during the 80's. I don't know what happened. The main national competition was Kroger, and of course A&P, which was once thought about the way Wal-Mart is now, virtually untouchable. Of course A&P's collapse opened the door for Giant Eagle to become dominant, and Kroger's exit in 1984 removed the only company truly capable of competing with them.

[I_Like_Spam]

Shop n Save was pretty competitive with Giant Eagle for a while, but now I think they are even more expensive than Giant Eagle and many of their stores don't seem to be doing that well.

Foodland used to have a pretty big presence as well, but most of their stores were just too small.

Thorofare, A&P and Kroger were all union shops, and that really hurt them particularly in competition with Giant Eagle that had "sweetheart" deals with the local retail union and Shop n Save and Foodland which had even sweeter deals or non-union shops.

Kroger was the last to drop out of the Pittsburgh market and they specifically cited the union as a key reason why they left.