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Dollar stores feel effects of recession

BY Alaric DeArment

NEW YORK — The penny-pinching consumers of the recession have become penny-clamping consumers, and dollar stores are starting to feel the effects, according to published reports.

The Wall Street Journal reported that Dollar General Corp., Family Dollar Stores and Dollar Tree had all missed quarterly earnings targets. One major reason was a rise in diesel fuel costs for trucks, but key factors also included rising gas prices, unemployment and stagnant wages, which resulted in customers finding it difficult to buy discretionary items, even at dollar stores’ deeply discounted prices.

As a result, customers at the stores are buying more essentials, such as food and cleaning products, rather than clothing and home decorations. While all three chains posted same-store sales increases that remained fairly strong, those increases have been getting smaller, according to the Journal.
 

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Canada Safeway launches new loyalty program

BY Michael Johnsen

WINNIPEG, Manitoba — Canada Safeway last month quietly launched a new loyalty program called the SafewayClub Elite Customer, according to published reports. Shoppers who qualify with a $125 weekly grocery bill can choose among a number of perks, including a nickel-per-liter discount off gasoline, 10% off roses and deli sandwiches, and cash back up to $300.

Members also enjoy such perks as refunds without receipts and direct access to the store manager via that manager’s cell phone number. Such perks as direct access to store personnel may seem odd, but it is a vastly inexpensive tool designed to retain customers compared with the costs of obtaining a new customer.

“The program recognizes our very best customers similar to those that may use a hotel, airline or car rental company with great frequency," John Graham, Safeway’s director of public affairs, told the Winnepeg Free Press, suggesting that the retailer’s frequent-shopper elite program is the first of its kind for grocery stores in North America.

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Report: Amazon poses threat to brick-and-mortar retailers

BY Michael Johnsen

NEW YORK — A story on the Wall Street Journal’s MarketWatch, published Monday, identified Amazon.com as the latest value-oriented retailer to pose challenges to more traditional brick-and-mortar retailers.

In a report titled “More retailers struggling to navigate Amazon’s surging current,” William Blair & Co. analyst Mark Miller compared merchandise overlap and relative pricing of 24 retailers against Amazon. Miller found that Amazon’s prices represented an 11% discount to the competition, on average.

And it’s not all Amazon’s merchandise, necessarily. Nearly half of the items were available via Amazon.com from a third-party seller. Third-party sellers represent more than 60% of the online retailer’s offerings, the report noted.

Such specialty retailers as Best Buy and Dick’s Sporting Goods stand the most to lose; Walmart and other mass merchandisers are at less of a risk because of their perishable foods departments — a category that cannot easily be replicated online. Similarly, drug retailers face a below-average risk of share loss to Amazon — outside of prescriptions, many items sold at pharmacy satisfy an acute need, such as cough and cold relief, for example.

Target has a 45% product overlapping with an 11% price gap against Amazon, MarketWatch reported, citing the William Blair analysis. Walmart has a 28% assortment overlapping with Amazon priced 5.4% lower on those identical items, the report added.
 

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