South Florida Ripe For Grocery As Recovery Bests Rest Of State
by Kristen Cloud/staff writer
As goes the population, so goes the grocery business; their growth generally runs parallel. That’s according to John Fleming, communications director for the Florida Retail Federation (FRF).
“In general, Florida is growing at a healthy pace,” Fleming tells The Shelby Report. “In Florida, specifically, population growth is a big driver of our economy and that has been strengthening, so we’re expecting annual growth to be anywhere between 1 and 1.5 percent annually for the next three or four years. That’s generally good for the grocery industry, which depends a lot on the population growth as a driver.”
The state’s total population currently boasts approximately 19.3 million, according to the latest census data. From April 1, 2010, to July 1, 2012, the Sunshine State’s population increased 2.7 percent.
South Florida is leading the state in overall growth, not only in terms of population but also in employment and other areas.
“…In markets like South Florida, southwest Florida…you’ve seen the employment growth recover a little bit quicker,” Fleming says.
As a whole, however, the state’s unemployment rate of 8.0 percent is running alongside the national rate and is the lowest unemployment has been in Florida since 2008.
“(The economy in Florida has) been improving now for at least three years,” Fleming says. “It might not feel like it to everybody, but when we look back at gross sales in Florida, it’s been up for three years in a row now. We’re not roaring back, but I think it’s a well-established, sustainable growth trend now. And that’s allowing retailers and grocers to plan for growth now because they are reasonably confident that the growth is going to be there.”
Trader Joe’s well received, Whole Foods continues to expand in Florida
A nod to the strength of the ever-improving Florida economy, Fleming reveals, is the expansion of both Trader Joe’s and Whole Foods Market.
“Those are two specialty grocers who are expanding in Florida, and I think that’s a good sign in that they see some strength in the state, which is leading to their investment and additional stores here,” he says.
Trader Joe’s debuted its first Florida store last year in Naples. Since then it’s opened stores in Sarasota and Gainesville. The Monrovia, Calif.-based grocer has announced it will open a 13,500-s.f. store in Pinecrest, in Miami-Dade County, later this year. It will be Trader Joe’s first store on the Atlantic side of Florida and be located at 9205 S. Dixie Hwy.
Whole Foods, another specialty grocer known for its natural and organic selections, is making inroads in South Florida.
The Austin, Texas-based chain, with 11 South Florida locations, plans to open its 12th store in Pompano Beach in 2014. The 40,000-s.f. store will be located at the intersection of North Federal Highway and Copans Road in a former Kmart space.
Whole Foods’ current South Florida stores are in Aventura, Boca Raton, Coral Gables, Coral Springs, Fort Lauderdale, Palm Beach Gardens, Pembroke Pines, Pinecrest, Plantation, South Beach and Wellington.
“They are (opening in more affluent neighborhoods),” Fleming says of Trader Joe’s and Whole Foods. “The fact that there’s an appetite for that, for that higher-end kind of specialty grocer, I think speaks well to the strength of our economy.”
These successful chains also attract competition from like-minded retailers.
Coral Springs-based Tunie’s Natural Grocery & Vitamin Supercenter, for example, was expected to open a 15,000-s.f. store at the LA Fitness Center Plaza in Palm Beach Gardens at the corner of PGA Boulevard and Florida’s Turnpike in February, bringing about 40 new jobs to the area. The store offers approximately 30,000 health food products.
The company, owned by Taylor Hamilton, opened its first store in Coral Springs in 1993. Hamilton told the Palm Beach Post in January that the proximity of the Whole Foods Market in Palm Beach Gardens, about three miles east, was one of the reasons Tunie’s decided to open in Gardens.
“Whole Foods has attracted the health food market in Gardens,” he said. “The demand is already there.”
Tunie’s is about half the size of the nearby Whole Foods. The aisles are narrower and the food stacked higher, according to Hamilton.
Competition from big-box and discount grows, too
South Florida, especially Miami-Dade County, has long been the land of missed opportunity for Walmart, according to The Miami Herald.
While the Bentonville-Ark.-based retailer may be the world’s largest grocer, in South Florida the company is a distant No. 3 when it comes to market share—behind Publix and the second place Winn-Dixie. Walmart doesn’t have a single store in the city of Miami, the newspaper reports.
Walmart, however, wants to change that. It’s trying, the Herald says, to move into the heart of the city. In fact, Walmart expects to invest $380 million in South Florida over the next two years. This investment is part of the company’s largest expansion in the tri-county area in about seven years, with 12 new stores planned plus the expansion or relocation of seven existing stores that will be adding groceries. All Miami-Dade stores already have groceries, and Walmart will finish adding groceries in Broward in 2014.
“Walmart is growing along with the economy and is announcing the expansions of facilities and opening new stores,” Fleming says. “They are ready to respond to the pickup and the economic activity.
“A lot of grocers pulled back and were very cautious about expansion a few years back at the bottom of the recession, which was about 2009 or so, and as the growth has taken hold in the economy for the past couple of years (Walmart is) seeing that consistent year-over-year increase and they’re expanding to meet the demand.”
Additionally, the Herald notes that Walmart is still looking for expansion opportunities for both traditional Supercenters and its smaller grocery-oriented Neighborhood Market.
The move to urban areas is part of a larger trend for big-box retail. Walmart’s South Florida growth, for instance, coincides with its moves nationally to expand its presence in the country’s largest urban markets. Walmart, as the Herald reports, has typically lagged behind its major competitor Target on urban expansion in these markets.
“There have definitely been a few markets in Florida where what you think of as the traditional big-box stores are looking at store models that cater more to urban markets,” Fleming says. “So that, again, is driven a lot by shifting population patterns.
“A lot of cities are actively encouraging infill. They are doing some things on the public policy side that make it more attractive to retailers to build in the city—pre-permitting sites, expediting permit processes. They are really trying to encourage investment in the cities.
“Population is coming back into a lot of urban centers, whereas for decades the pattern was for people to move out to the suburbs, which sort of created and cultivated the big-box model. People are now moving back into cities and they’re doing less driving; retailers are going to go where the customers are so you’ve seen grocers in particular creating smaller stores that will fit into more urban settings.
“Walmart is one that has actively sought out urban locations, so there’s a number of locations in Florida where they are moving into a smaller Neighborhood location.”
Discount grocer Aldi, with nine stores in South Florida, plans for expansion in this portion of the state as well.
The German company with U.S. headquarters in Illinois is slated to open a distribution center and regional headquarters in Royal Palm Beach this year. The Palm Beach Post reports that the 821,000-s.f. warehouse is scheduled to open on 72 acres along State Road 7 and create about 100 permanent jobs.
Aldi, the Post says, plans to open about 60 stores throughout South Florida in the near future. The company entered the Florida market in late 2010.
Traditional formats still dominate
Publix and Winn-Dixie, the No. 1 and 2 players, respectively, in South Florida when it comes to market share, seemingly have no intention in giving up the top spots.
Late last year, Publix affiliates bought two shopping centers in South Florida, according to the South Florida Business Journal.
Plantation Towne Square is a 108,111-s.f. retail center at 6905-6989 West Broward Blvd. in Plantation. Built in 2001, the center is 98.6 percent leased to various tenants including Publix and Publix Liquors, Starbucks and Verizon. The building is on 10.6 acres in the city of Plantation.
Colonial Shopping Center is located on a six-acre site at 9510-9698 SW 160th St. adjacent to South Dixie Highway in Miami. Developed in 1997 and expanded in 2007, the 67,351-s.f. property is 95.8 percent leased to tenants including Publix, Family Dollar, FootLocker and Space Coast Credit Union.
Lakeland-based Publix opened a store in Delray Beach, in Palm Beach County, on Jan. 17. The 45,600-s.f. Delray Marketplace store is located at 9239 Atlantic Ave.
Winn-Dixie, headquartered in Jacksonville, reopened its store at 6600 Hypoluxo Rd. in Lake Worth in September. It’s a sign, the Post says, that the BI-LO-owned grocery chain’s trimming may be at an end in South Florida.
The reopening marked the first Winn-Dixie to open in Palm Beach County in at least eight years. Except for a reformatted store in Margate that opened in June 2010, it’s the only new opening in about the same stretch for all of South Florida, the Post reports. That was a month before Winn-Dixie announced it was closing nine area stores in one fell swoop and part of the scaling back that cut its presence in half since the recession.
Meijer Expands Made In Michigan Initiative Statewide
Meijer has expanded its program that supports Michigan small businesses to feature 55 new Michigan-made grocery products in all its stores statewide, Meijer Co-Chairman Doug Meijer says.
“Meijer is committed to supporting Michigan businesses, and the Made in Michigan initiative is a great opportunity to highlight some fantastic small businesses throughout the state,” Meijer says. “The response we received from our customers last year about this initiative was overwhelming, which is why we decided to further invest and expand this selection into all our Michigan stores.”
Grand Rapids-based Meijer launched the Made in Michigan initiative in January 2012 with the Michigan State University Product Center for Food-Ag-Bio. Its goal is to help strengthen the state’s economy by supporting Michigan small businesses. The initial offering of 49 grocery items—including marinara sauce, blueberry butter and gluten-free baking mixes—resulted in an estimated economic impact of $400,000 statewide.
This year’s lineup of 55 Michigan-made grocery products will be more visible in all of the 102 Meijer stores in Michigan. Items including barbecue sauces, cherry butter, salsas, guacamole and kettle chips are expected to have an estimated economic impact of $900,000 statewide, says Matt Birbeck, High Impact Venture Action Team project manager for the MSU Product Center.
“It’s been a fantastic opportunity for all Michigan businesses to have this local section at Meijer; many of them see amazing results,” Birbeck says. “Now that it’s in every Michigan Meijer store, everybody gets to see and taste the diversity of this great state.”
Meijer worked with the MSU Product Center and its HI-VAT initiative to expand the program and ensure that all the suppliers had the right food protocols and supply chain procedures. The items are expected to remain on the shelves for a year, and will have an opportunity to branch out chain-wide. Of the initial items that were featured in 33 Meijer stores last year, a few products are under consideration to be mainstreamed onto the shelves as part of the retailer’s regular grocery offerings.
After losing his job in 2010, Tarek Abouljoud decided to start Teta Foods, a Michigan-based company specializing in manufacturing healthy Mediterranean foods. He learned about the retailer’s Made in Michigan initiative through the MSU Product Center, and was thrilled when all five of his products were approved by Meijer.
“The biggest challenge that small food manufacturers face is reaching the inflection point where they become a well-recognized and successful company with a great brand,” says Abouljoud, president/owner of the Clinton Township-based company. “We believe this is going to be the turning point for our company in becoming a great Michigan business success story. We are grateful to have Meijer as part of our success story.”
New Hampshire And Vermont 2013 Market Profile
Proposed Taxes Pose Threat to States’ Grocery Industries
by Kristen Cloud/staff writer
The grocery associations in New Hampshire and Vermont are staying busy as the states’ legislative sessions are in full swing and legislators deal with numerous revenue tax issues—many of which would impact the industry directly.
In New Hampshire, the tobacco tax will go up 10 cents in June, from $1.68 to $1.78 per pack of cigarettes—essentially eliminating the 10-cent tobacco tax reduction that was passed in 2011. Coupled with that, the state’s new governor, Maggie Hassan, has proposed an additional 20-cent hike, which would make the cigarette tax $1.98 per pack, a $3 increase per carton.
“(This issue is) critical for us because we’ve been the low-price leader in the Northeast for some time on the tobacco issue, and this would put us on par, or even slightly ahead, of some of the surrounding states,” John Dumais, president and CEO of the New Hampshire Grocers Association, tells The Shelby Report. “We would lose some of our sales to (those states).”
Cross-border sales are imperative for New Hampshire to remain competitive and healthy, Dumais reveals.
“…Our state is very dependent on cross-border sales,” he says. “Because we have no sales tax and all the states around us do have a sales tax—that’s a substantial draw. We also have low liquor prices because the Liquor Commission has their own state stores and they promote the fact that they have the lowest prices in the Northeast, if not the whole country. That’s another draw. And, of course, the tobacco tax is a lower price.
“We draw people into the state with those lower prices,” Dumais adds, “and we now know that about 40 percent of our customer base comes from…out-of-state residents; they don’t reside in New Hampshire. And when they come here, because they’re coming from as far away as New York and New Jersey and Connecticut and other areas, quite often they’re buying more than what they’d normally buy. So we see that, in some cases, some price-sensitive products like tobacco or alcohol…that it’s as high as 60 percent of our total sales. There’s a lot at stake.”
New Hampshire’s governor and legislature are elected every two years. In addition to a new governor, Dumais notes that much of the legislature is comprised of freshman lawmakers.
“We have additional work of trying to help them understand what the dynamics are of any kind of legislation (and the impact it) can have on an industry,” Dumais says.
A proposed 15-cent-a-gallon gas tax increase was slated to come up for debate Feb. 27 (after press time). The Granite State’s current 18-cents-a-gallon tax is the lowest in New England. The gas tax in New Hampshire was last increased in 1991. The proposed increase would finance repairs of state roadways.
Neighboring Vermont also is facing a potential gas tax increase.
“Many of our members who sell gasoline are very concerned about a proposal to add 8 to 10 cents and automatically index it to inflation for the gas tax,” says Jim Harrison, president of the Vermont Grocers Association (VGA), which represents 375 retail members that collectively operate about 630 stores. “We’re already about 7 cents higher here a gallon than New Hampshire, so this would make us 15 to 16 cents more than New Hampshire.
“(It would be a) serious detriment along the eastern side of the state in terms of stores where gas is part of their mix and part of the reason for attracting customers. When you’re that far different (in price), it’s really hard to compete, and you just can’t take that kind of tax difference out of your margin and keep the customer happy.”
Harrison tells The Shelby Report that his group represents a number of convenience retailers and country stores that sell fuel, and “the gas tax is certainly a very, very important item.”
Another proposal in Vermont calls for a penny-an-ounce tax on sugar-sweetened beverages. The bill, according to reports, would raise an estimated $27 million to support state health programs and, supporters say, discourage consumption of products that contribute to obesity.
“That proposal has gained a lot of traction, a lot of momentum, over the last month,” Harrison says. “Last week (mid-February) it sort of hit a little bit of a wall when a committee voted 5-5, and therefore it didn’t advance.
“However, there are still other committees looking at that as a potential revenue source, so we’re very concerned about what that will mean for the price of beverage products if it is advanced.”
Labeling products that contain GMOs—genetically modified organisms—also is a topic of worry for the industry in Vermont, according to Harrison. He points out that proponents of the legislation in Vermont are even more incented now since a similar proposal, in the form of Proposition 37, was defeated in California on the November ballot.
“From our perspective, Harrison says, “it’s just totally inefficient and very cumbersome and very expensive to try to do state-by-state labeling—whatever the issue is, whether it’s GMO labeling or something else. Whatever it is, we believe you need to have national uniform standards.”
Grocers eager to enter New Hampshire
New Hampshire saw several new grocers enter the state in 2012. Among them: Trader Joe’s, The Fresh Market and Aldi. Whole Foods, according to its website, also has its first New Hampshire store under development. Other grocers, with roots well established in the state, are opening new stores as well.
• Monrovia, Calif.-based Trader Joe’s made its debut in New Hampshire in July with a 9,850-s.f. store at 262 Daniel Webster Hwy. in the Webster Square Shopping Center in Nashua.
• The Fresh Market, headquartered in Greensboro, N.C., opened its first New Hampshire store in June at 79 South River Rd. in the revitalized Bedford Mall in Bedford.
• Discount grocer Aldi made its entry into New Hampshire last March when it opened a 17,000-s.f. store at 541 South Broadway in Salem.
• Whole Foods reportedly has its first New Hampshire store under development for Nashua, according to the Austin, Texas-based company’s website. NashuaTelegraph.com reports that the closest Whole Foods stores are in Andover and Bedford, Mass.
• Market Basket, a privately held chain based in Tewksbury, Mass., continues its expansion in New Hampshire. The New Hampshire Business Review reports that, “with the addition of Manchester and Londonderry stores, Market Basket added more square footage than any other retailer in all of southern New Hampshire between June 2011 and April 2012.” The company currently has 28 New Hampshire locations with plans, the Business Review says, to open a store this year in Bedford. Also, the report continues, “an 80,000-s.f. grocery store proposed in North Conway has been rumored to be a Market Basket.”
• Dumais reports that New Hampshire continues to see growth in the dollar store segment.
“I think they are (doing well),” he says. “As we’ve seen in other parts of the country, everyone’s…concerned about the federal government and where we’re heading with that—the fiscal cliff is not resolved yet, we don’t know where our taxes are going to go yet. We don’t know for sure where the health mandate’s going to go or how it’s going to impact everybody. All those things are just making everybody more conservative.”
Grocery growth steady in Vermont
It appears that Vermont’s approximately 630,000 residents will soon have more options when it comes to where they buy their groceries.
• Mike Comeau, an independent operator who owns Village Market of Waterbury in Waterbury and Richmond Market & Beverage in Richmond, plans to open a store in a former Grand Union in Johnson in late spring or early summer. The GU store, Harrison says, closed in 2011 due to flooding. Since then, Johnson has been without a grocery store.
“There’s quite an investment being undertaken to make that facility less flood prone,” Harrison says, “and to rebuild it.”
• Aldi, which currently has one store in Vermont—in the southern city of Bennington—has started construction on its second store in the Green Mountain State. The 17,800-s.f. store in Rutland is scheduled to open in the spring or summer at the site of the former Smith Buick GMC on South Main Street. A third Vermont Aldi is expected to open later this year at 768 Putney Rd. in Brattleboro, according to the Rutland Herald.
• Trader Joe’s hopes to open its first Vermont store at 200 Dorset St. in South Burlington. Plans are in the preliminary stages.
• Vermont is slated to get its fifth Walmart, and first Supercenter. If permitting goes as planned, the Walmart Supercenter in Derby—near the Canadian border in the northeast corner of the state—could begin construction in early 2014.
• Hannaford, a Delhaize banner, is in the process of building a new store to replace its current Bradford location along Route 5. When complete later this year, the new store will be nearly three times the size of the current one, WCAX.com reports. Hannaford, Harrison says, is among Vermont’s three largest supermarket operators, along with Price Chopper and Shaw’s.
As for Shaw’s (a Supervalu chain that is among the retail banners the company plans to divest to Albertsons LLC’s parent company), it, as well as Star Markets, will be led by Shane Sampson, according to an announcement made by Albertsons LLC in February. Sampson is the former VP of marketing and merchandising for Albertsons LLC’s Southern Division. He started with Albertsons in 1983 and was a division president in the Intermountain and Florida divisions for Albertsons Inc. He is returning to the company after having held the role of SVP of operations at Giant Food.
“We haven’t seen any change here (with Shaw’s) in Vermont,” Harrison says. “Obviously, their transition is scheduled to take place in the coming month and all indications are that they will continue to participate with the (VGA) and get more focused on their food retailing.
“But it’s not an easy marketplace out there,” he adds. “Competitors aren’t sitting by the wayside and going to let them take more of their business. It will be interesting to see how it happens, but hopefully for the folks at Shaw’s it will be a positive move in that some of the distractions with headquarters and problems at that end will be behind them and they’ll be able to focus on the business at hand.”
Cautious on economy, but seeing some positive signs
The unemployment rates in both New Hampshire and Vermont remain below 6 percent, well less than the national rate of 7.9 percent. Nevertheless, both Dumais and Harrison are guarded about the economy.
“We haven’t had any population growth,” Harrison says of Vermont, “so it’s obviously a zero-sum game.
He says for retailers it comes down to reinvesting and finding their niche in the marketplace. Those who do will “find ways to get their share of the pie.
“Remaining the status quo sometimes is not a good strategy and you find yourself on the short end of business, of the potential that’s out there,” Harrison says. “Small stores continue to struggle overall. We have lost some of our treasured country stores in the past year and that’s a challenge; some have found new ways to do business and broaden their market mix, but it is a struggle for some small stores in this economy.”
New Hampshire’s Dumais agrees.
“We’re still treading water here,” he says. “I think everyone’s a little concerned about where the economy’s going and what their pocketbooks are going to do, but, at the same time, we still see that we have some activity that’s very strong—especially with the winter events that are happening (skiing and other seasonal activities).
“So hopefully we’re going to get some answers soon that’ll give everyone a little more assurance,” Dumais adds, “and bring back some sales that we’ve been losing.”
Number Of Americans On Food Stamps Hits New High
According to the latest U.S. Department of Agriculture report released Friday, the number of U.S. participants in the Supplemental Nutrition Assistance Program (SNAP, or also referred to as food stamps) has hit another all-time record high of 47,791,996 for the month of December 2012, with an average per-person benefit of $133.73 per month.
Despite the recent economic data from the Bureau of Labor Statistics that U.S. unemployment has reached a post-recession low of below 8 percent for February 2013, more than 100,000 new SNAP participants were added in just one month from the November 2012 figure of 47,682,072.
The number of U.S. households on SNAP also hit an all-time record high at 23,064,554 in December 2012, which broke the previous record of 23,017,768 households for the month of November 2012.
According to reports, there were about 32 million Americans on SNAP when President Barack Obama took office in January 2009.
Buy Alabama’s Best Kicks Off 2013 Campaign
The Alabama Grocers Association, the Alabama Department of Agriculture and Industries and the Alabama Food Manufacturers and Producers Association held a press briefing earlier this week for the 2013 Buy Alabama’s Best Campaign. The briefing was held at the Capital City Club in Montgomery.
Event speakers included Agriculture Commissioner John McMillan, Speaker of the House Mike Hubbard and industry leaders. Following the briefing, attendees enjoyed a lunch buffet featuring all Alabama products included in the campaign.
The Buy Alabama’s Best campaign will run through September and is designed to inform and educate consumers on what products are made, produced, manufactured and/or headquartered in the state of Alabama.
During these tough economic times it is vitally important to support local economies, according to event organizers. Alabama food product sales have a $2 billion impact on Alabama’s economy, tax base and, in addition to grocery and foodservice industries, employ one out of every four Alabamians.
A portion of the sale of participating Alabama products during the months of March-September will go to Children’s of Alabama to help find a cure for childhood cancer. To date, efforts have raised more than $435,000. Retailers all over the state will be supporting this campaign in their stores with Alabama product displays, ads, signage, special promotions and will sell Children’s of Alabama icons to support the fight to find a cure for pediatric cancer. The Buy Alabama’s Best logo will appear under products made in Alabama.
Go here to find a complete list of Buy Alabama Best participating companies.
In the featured photo at top: Dominic Baldone of Piggly Wiggly Alabama Distributing and Tricia Wallwork and Jay Evers of Milo’s Tea. (Find more photos from the event here.)
Customer Satisfaction Up At Supermarkets
The national customer satisfaction benchmark gains 0.5 percent to 76.3 on a scale of 0 to 100 for the fourth quarter of 2012, according to a report released today by the American Customer Satisfaction Index (ACSI). The rise comes from strong public sector gains combined with moderate customer satisfaction improvement for five of eight retail and e-commerce industries.
“The improvement in overall customer satisfaction is positive news for consumer demand but with the caveat that a good portion of the gain comes from federal and local government services,” says Claes Fornell, ACSI founder and author of “The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference.” “Looking at the economy as a whole, low inflation, shrinking household debt and pent-up consumer demand are starting to fuel consumer spending. At the same time, however, economic growth will be hampered by a still-tepid job outlook, low wage increases, high gasoline prices and the economic uncertainty created by our politicians.”
The fourth quarter 2012 national score is based on the ACSI’s annual report on citizen satisfaction with government services, along with new scores released today for retail and e-commerce. The 2012 government report, available earlier this month, shows ACSI increases of 2.2 percent for federal and 3.0 percent for local government services. Today’s report covers customer satisfaction with 44 companies in eight industries: supermarkets; department and discount stores; specialty retail stores; health and personal care (drug) stores; gasoline service stations; and internet retail, brokerage and travel.
Shoppers seek the right combination of quality and value
Whether shopping for groceries, specialty goods like office supplies or electronics, or patronizing stores with a broad array of merchandise, American consumers are seeking the right balance between quality and value, with the latter becoming somewhat more important since the recession. Supermarkets show an ACSI benchmark of 77 in 2012, up 1.3 percent since 2011.
“Low price inflation for food products in 2012, combined with better service, product selection and store layouts, yields success in the form of enhanced customer satisfaction for supermarkets,” says Fornell.
Publix’s track record of leading customer satisfaction continues as the chain gains 2 percent to an ACSI score of 86. Publix widens the gap to Whole Foods, which is stable at 80 after four straight years of improvement. Kroger’s customer satisfaction also is unchanged at 79, while Winn-Dixie jumps 4 percent to 78.
Further down, Supervalu, Safeway and Walmart are in the mid-to-low 70s, which suggests that even in a strapped economy, low prices alone are not enough to make customers happy. Supervalu gains 3 percent to 76 and Safeway is flat at 75. Discount giant Walmart is in last place despite a 4 percent gain to 72.
Specialty retailers retreat 1.3 percent to an ACSI score of 78, with warehouse clubs and office suppliers dominating the top and clothing retailers at the bottom. Office Depot vaults into the lead with a 6 percent gain to 84. The company’s transition from large outlets to smaller stores with better service seems to be a winning strategy. Office Depot handily beats rivals Staples (79) and OfficeMax (78).
Bookseller Barnes & Noble shows the second-largest upswing, rising 4 percent to 82. While customers are having better experiences at Barnes & Noble stores, this may be because fewer people are visiting them. The company’s sales have been weak and many stores have closed. Two warehouse clubs bookend Barnes & Noble: Costco at 83 (unchanged) and Sam’s Club at 80 (-1 percent). Lowe’s (79), Best Buy (78) and Home Depot (77) are at, or close to, the industry average. Cost increases for raw materials passed on to consumers have not helped clothing retailers TJX (-3 percent) and Gap (-1 percent), both at the bottom of the industry at 76.
In contrast to specialty stores, department and discount stores improve customer satisfaction by 1.3 percent to 77. Quality and customer service keep Nordstrom on top with a firm ACSI benchmark of 84. What makes Nordstrom strong is a weakness for Walmart. Lower quality and less customer service put it in last place at 71.
“While quality trumps price with respect to customer satisfaction, pricing pressure remains a challenge for all retailers amid growing but continually weak consumer demand,” says Fornell. “Even the high-end department stores have resorted to more price promotions to boost sales, particularly during the 2012 holiday season.”
Following behind Nordstrom, Target, Kohl’s and J.C. Penney are tied at 81. The next tier down includes Dillard’s at 79, followed by Macy’s, Dollar General and the aggregate of smaller department and discount store chains (all 78). Sears continues to struggle long after its acquisition by Kmart. Down 1 percent to 75, Sears trails the entire field except for Walmart at 71.
“A big part of Walmart’s challenge is that it is no longer the only game in town when it comes to discounting,” says Fornell. “Twenty years ago, Walmart was able to beat the industry average for customer satisfaction—not because merchandise quality was better, but because it was close enough to, or on par with, competition and it had the low-price market essentially to itself. According to customers, neither is true today.”
Health and personal care: big chains narrow gap to small stores
Customer satisfaction with health and personal care (drug) stores reverses a two-year slide with an increase of 1.3 percent for 2012. With an ACSI score of 77, drug stores are similar to supermarkets, department/discount stores and specialty retail. In 2011, smaller drug stores held a 7- to 9-point advantage over the larger chains. In 2012, a 4 percent drop to 79 for small stores narrows their lead to 2 points.
Rite Aid earns the top position among larger chains with a 3 percent improvement to 77. Walgreens is next at 76 (+1 percent), while CVS gains 3 percent to 75. Two years ago, customer satisfaction for CVS hit an all-time low amid declining sales and cost-cutting efforts. Better customer satisfaction today probably has helped revenues rise 15 percent over the past year.
Online retail back on track
Customer satisfaction with online retail is up for a second year in a row, improving 1.2 percent to 82. While two minor yearly gains nearly erase the decline in 2010, the industry falls short of its all-time high. Nevertheless, online retailers are still winners over traditional retailers (average of 76.6 overall). Netflix, which plunged 14 percent two years ago because of price increases, gains 1 percent to 75.
“By and large, internet retail remains a more amiable way of shopping for a variety of merchandise,” says Fornell. “It is worth noting, however, that there are exceptions to the rule. The cream of the crop in traditional retail—Publix, Nordstrom, Office Depot and Costco—all outperform the average customer satisfaction benchmark for internet retail.”
Amazon remains best in class among e-tailers despite a 1 percent slip to 85. Newegg is in second place at 84 (-1 percent), followed by an improved eBay at 83 (+2 percent). The aggregate of smaller websites and Overstock move 2 percent in opposite directions to scores of 82 and 81, respectively. The gain for smaller websites follows a similar increase in 2011, which nearly offsets 2010’s decline.
Internet brokers rebound; travel websites tumble
Customer satisfaction with online brokerage bounces back from a loss in 2011, up 2.6 percent to an ACSI score of 78. A stronger stock market, combined with a substantial ACSI gain for smaller brokerages, contributes to the improvement. The aggregate of smaller brokerages (such as Vanguard and Scottrade) leaps from bottom to top of the industry with a 4 percent gain to 78.
Among the larger internet brokers, Fidelity emerges from 2011’s three-way tie as the leader at 78 (-1 percent). Charles Schwab (-3 percent) and TD Ameritrade (-1 percent) are close with an ACSI score of 77. Only E*Trade lags well behind the category average at 73. A year ago, E*Trade shared the lead at 79, but a precipitous plunge of 8 percent puts the company in last place. While Fidelity or Schwab are more diversified, E*Trade relies heavily on trading fees and commissions, which makes it harder for the company to weather volatility in trading volume.
The customer satisfaction outlook for the internet travel business is not much sunnier now than in 2011, as its ACSI score falls 2.6 percent to 76—the biggest loss among all retail categories. Higher prices and fewer deals erode customer perceptions of value. The score range has narrowed considerably as well, with just 2 points separating the top from the bottom performers. The aggregate of smaller websites drops 4 percent to 76, still good enough to finish even with Expedia (-1 percent) and Orbitz (unchanged) for the lead. A point below, Travelocity is at 75 after tumbling 5 percent. Priceline rounds out the category at 74, following a 3 percent drop.
The American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. The ACSI uses data from interviews with roughly 70,000 customers annually as inputs to an econometric model for measuring satisfaction with more than 230 companies in 47 industries and 10 economic sectors, as well as more than 100 services, programs and websites of federal government agencies.
Former Hostess Workers Eligible To Apply For Trade Adjustment Assistance
The U.S. Department of Labor said Tuesday that approximately 18,000 workers laid off in 48 states from 864 Hostess company locations are eligible to apply for Trade Adjustment Assistance.
“As President Obama said in his State of the Union address, ‘to grow our middle class, our citizens must have access to the education and training that today’s jobs require,’ ” said acting Secretary of Labor Seth D. Harris. “Trade Adjustment Assistance enables workers to pursue training in the skills that today’s employers need, contributing not just to a stronger middle class, but to a stronger American economy.”
This TAA certification was based on a Labor Department investigation to determine whether the layoff event met the group eligibility criteria set forth by the Trade Act of 1974. An investigation found that increased imports of baked products contributed importantly to the company’s sales declines and worker separations.
Workers covered by this TAA certification will be contacted by their respective state workforce agencies with instructions on how to apply for individual benefits and services. Those who qualify may receive case management and re-employment services, training in new occupational skills and/or trade readjustment allowances that provide income support for workers enrolled in training. Workers may also receive job search and relocation allowances, and the Health Coverage Tax Credit.
While TAA is open to eligible workers of all ages, workers 50 years of age and older may elect to receive Re-employment Trade Adjustment Assistance instead. If a worker obtains new employment at wages less than $50,000 and less than those earned in the trade-impacted employment, the RTAA program will pay 50 percent of the difference between the old wage and the new wage, up to $10,000 over a two-year period. RTAA participants may also be eligible for retraining and the HCTC.
For more information on TAA and the range of the Department of Labor’s employment and training services, visit http://www.doleta.gov.
Valu Land Opens In Dearborn, Mich.
A new supermarket has opened in Dearborn, Mich. Valu Land hosted a grand opening and ribbon cutting ceremony Feb. 17-18 at its new store at 22541 Michigan Ave.
The supermarket opened in a revitalized vacant building and brings with it 40 new jobs. The store offers a full and convenient shopping experience with grocery, produce and other fresh products, in addition to hard-to-beat savings on everyday items, according to a news release. Valu Land is a low price leader that serves families who are value and budget conscious, the release adds.
Store Manager Ryan Wingett says, “Valu Land is perfect for shoppers who are on the hunt for lower grocery prices and welcomes the neighborhood to experience these savings. The stores carry national brands and Michigan’s favorite Spartan branded products, which, on average, cost 20 percent less than national brands for comparable or better quality. A good selection of fresh items such as quality meats, fresh and seasonal produce and deli and bakery items will be part of the product mix.”
Offering an appealing and attractive décor, the store creates a pleasant shopping atmosphere. Colorful, eye-catching signage and a POS program promote value and directs consumers to savings throughout the store, the release says.
According to Alan Hartline, Spartan Stores EVP of merchandising and marketing, “We are delighted to be part of the Dearborn community and to bring Valu Land to area shoppers. The store caters primarily to budget-minded households by offering value-priced items, as well as convenience, freshness and quality. With the economy as it is, Valu Land is responding to a heightened need for value that shoppers can depend on every day. Convenience is a key factor in terms of finding quality staple items at low prices in an organized supermarket which saves time searching for deals and navigating the store.”
Valu Land also has stores in Lansing, Leslie, Marion, Clare, Roseville and Warren. They are among the 101 retail supermarkets throughout Michigan that are owned and operated by Grand Rapids-based Spartan Stores, which also is a wholesale distributor to more than 375 independent grocery locations in Michigan, Indiana and Ohio.
